The cost of buying a pub meal, soft drink or hotel stay could become more expensive from April as VAT levels across the hospitality sector lift back to 20 per cent.
The industry saw VAT dropped to 5 per cent to support its recovery during the pandemic.
It rebounded to 12.5 per cent in October last year as restrictions eased, but from today it returned to 20 per cent.
Despite the initial fall in tax, few pub groups, restaurants and leisure businesses were able to pass on the benefits of the tax break – which covered soft drinks, food, events tickets, accommodation and other areas – to customers due the financial impact of the pandemic.
Bosses said lengthy Covid disruption, significant debts and soaring cost inflation in recent months mean the reduced tax level has been used to help absorb costs.
However industry chiefs, including Wetherspoon founder Tim Martin and Young’s boss Patrick Dardis, said prices will now have to increase significantly for customers as a result of reduced VAT support.
Leaders warned the Government that the VAT increase will contribute to a “cliff edge” on Friday as wages and business rates changes also come into force.
Emma McClarkin, chief executive of the British Beer and Pub Association, said the VAT rate increase alone is expected to cost UK pubs more than £500 million over the next year.
UKHospitality boss Kate Nicholls said it “might prove fatal” for business owners.
To sign up to the Daily Record Politics newsletter, click here.
