Rishi Sunak has slashed VAT rates to 5 per cent on food, accommodation and attractions in a bid to boost the leisure and hospitality economy in the face of a coronavirus-induced recession.
In his summer statement delivered in the House of Commons today (July 8) the Chancellor of the Exchequer confirmed the temporary measure would last for six months from next Wednesday.
The current standard rate of VAT on most goods and services is 20 per cent, having been raised from 17.5 per cent in 2011, but Mr Sunak's plans will see the tax cut on the chosen products to 5 per cent.
Examples of products with slashed VAT rates include attractions such as cinemas, eat in or takeaway food and hotels.
He said: "Our economy relies on consumption, especially social consumption. The pub, cafe, hotels, restaurants and BnBs which bring life to our towns and cities."
He added many rural and coastal communities relied on those industries and that the sector had the highest furlough rate.
Mr Sunak said: "I know people are cautious about going out, but we would not have lifted the restrictions if we did not think they could do so safely."
The chancellor also announced a 'Eat Out to Help Out' discount scheme to encourage consumers to visit restaurants, cafes and pubs.
Meals eaten at any participating business, from Monday to Wednesday, will be 50 per cent off for a maximum discount of £10 per head throughout August.
Mr Sunak said businesses could register from next Monday and then claim the money back within five working days.
rachel.mortimer@ft.com and imogen.tew@ft.com
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