JD Wetherspoon’s Tax Equality Day ‘to highlight benefit of permanent VAT reduction’

Pub chain JD Wetherspoon has announced plans for a Tax Equality Day to highlight the impact a permanent VAT reduction could have on the hospitality industry.

On Thursday 23rd September, the company will cut the price of all food and drinks at 870 of its pubs across the UK by 7.5%.

While VAT on pub food and drinks currently stands at just 5% due to the UK Chancellor Rishi Sunak implementing a temporary reduced rate on July 2020, it is due to increase again to 12.5% on 1st October and to its pre-pandemic rate of 20% by 2022.

JD Wetherspoon is angry about what it believes to be unfair treatment of the hospitality sector; in comparison, supermarkets pay zero VAT on good and typically use this saving to offer alcohol to customers at lower prices than many pubs can achieve.

Tim Martin, chairman at JD Wetherspoon, says: “Taxes should be fair and equitable. However, it is unfair that supermarkets pay zero VAT on food, but pubs and restaurants, in normal circumstances, pay 20 per cent.

“Pubs have been under fantastic pressure for decades, owing to the tax disadvantages which they have with supermarkets.

“Customers in our pubs on Tax Equality Day will find that the price of their food and drinks will be lower than normal.”

While customers will enjoy lower prices in JD Wetherspoon establishments next Thursday, they will find the cost of a meal rises by about 50p once the reduced rate of VAT hits 12.5% on 1st October.

“We urge the chancellor to create tax equality between pubs and supermarkets by making permanent the current VAT regime for pubs,” Mr Martin adds.

“He should note that the main impact of tax inequality is on high streets and town and city centres, which depend heavily on a diversity of prosperous hospitality businesses for economic, social and employment success.”

We say…

Tax Equality Day is a welcome opportunity to raise awareness of the pivotal role VAT plays in driving both local and national economies. Setting rates is always a balancing act (and we don’t envy the Chancellor having to make these decisions), but every alteration has a major impact on businesses and consumers across the country.

Hospitality businesses in the UK have been hit hard by the pandemic and will see the upcoming rise in VAT to 12.5% as a kick in the teeth just as they are beginning to get back to normal. Customers could see additional VAT as a reason to cut back on spending, which in turn reduces VAT receipts for the Treasury.

If the pandemic has taught us anything, it’s that changing VAT rates is an indispensable tool for governments around the world as they seek to generate revenue and kickstart industries – and they will not hesitate to implement both rises and reductions to meet their ever-changing economic goals.

We’ve seen more changes to VAT rates in the last year than at any other time in history, making it more difficult than ever for businesses to ensure they are accurately determining and calculating VAT.

That’s why we’re so proud of our tax technology that has helped our customers seamlessly stay on top of thousands of updates from over 150 countries around the world.

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