VAT at 20% Is Killing the Industry

TL;DR: UK hospitality is carrying a 20% VAT burden while many European competitors operate at substantially lower rates. This article explains how that tax pressure contributes to closures and job losses, and why the industry is campaigning for a 10% rate.

Hospitality is one of the few industries that has learned to absorb punishment quietly. Rising costs, shrinking margins, staff shortages, and barely a word of complaint to anyone outside the kitchen. That stoicism has served us badly. It has made it easy for governments to look the other way.

The problem they have been looking away from is VAT.

In the UK, hospitality businesses pay 20% VAT. That sits on every meal served, every pint pulled, every hotel bed slept in. It is the second highest rate in Europe. Only Denmark charges more. France, Spain and Italy operate at 10%. Germany charges 7%. While those countries have recognised that hospitality is worth protecting, the UK has continued to treat it as a reliable source of tax revenue, regardless of what that does to the businesses carrying the weight.

A hundred thousand jobs have gone from this sector in the last two years. Not a rounding error. A hundred thousand people. Venues are closing in towns and cities across the country, not because the cooking is bad or the staff are poor, but because the economics have become impossible. When a business is paying 20% VAT on turnover while managing energy costs, food inflation, wages and business rates all at the same time, the margins simply do not hold.

I have run kitchens under pressure. Most of you reading this have too. You know what it looks like when the numbers stop working. You know the conversation you have with yourself at the end of a bad month. For a lot of operators right now, that conversation is happening every month.

The #VATsTheProblem campaign is asking the Government to cut the hospitality VAT rate to 10%. That is not a radical ask. It is the rate most of our European competitors already operate at. It is a number that would make a material difference to the survival of venues that are currently on the edge, and it would protect jobs that genuinely matter to communities.

Tom Kerridge is spearheading the campaign and there is a petition to sign. It takes thirty seconds. What I would ask is that everyone connected to this industry does exactly that, and then asks their teams, their suppliers, their regulars and anyone else who has ever eaten in a restaurant or had a pint at a local pub to do the same.

Sign the petition here: https://www.vatstheproblem.co.uk

If you want to understand the numbers and the case in full, it is set out clearly at: https://www.vatstheproblem.co.uk/whyvat

And if you run a venue and want to get behind the campaign properly, there are social assets, posters and other materials in the campaign toolkit, with a push being made before 1 July: https://www.vatstheproblem.co.uk/campaigntoolkit

This industry has absorbed enough. Sign it, share it, and make some noise.