Hospitality VAT rates increase to 20% as industry ‘teeters on the edge’

A number of Manchester business owners have expressed their concern over the new hospitality VAT price, which increased back up to 20% yesterday.

The government first announced a reduced VAT rate of 5% back in July 2020 for supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions. 

This came as part of its post-pandemic support package for the hospitality industry, and was originally due to last until January 12th 2021.

However, following more national lockdowns, the discounted rate was extended through until September 30th 2021, where it was then increased to 12.5%. 

Manchester’s Finest Group

And as of yesterday, March 31st, hospitality tax officially increased back to its original rate of 20%.

While many industry bosses were prepared for this tax rate increase, the ongoing cost of living crisis has made it hit businesses harder than ever before, with many voicing concerns that they may not survive it. 

According to Greater Manchester’s Night Time Economy Advisor Sacha Lord, these businesses are being forced to pay more for ‘everything across the board’, such as the grain to make beer and energy to heat and light their venues.

So with all of these factors considered, business owners are facing an unprecedented climate and the constant threat of total collapse.

@another_hand_mcr / Instagram

Julian Pizer, owner and head chef of city centre restaurant Another Hand, has slammed the tax increase as a ‘joke’, with him telling Manchester’s Finest: “To be honest, the rate going back to what it was pre- Covid was expected and not our biggest concern.

“But for us, it’s the 43% price rise on power and the further 43% increase expected again in October. That will be what cripples small business like ours.

“It’s a joke that that’s the way they want to reclaim the money lost over Covid. I don’t know how families will survive let alone businesses.

“It’s a sure fire way to insure another recession.”

The owner of Ancoats-based chippy Hip Hop Chip Shop has also voiced his concerns about the tax increase, sharing a breakdown of a range of costs the business now faces.

Showing that the cost for fresh fish has risen by 20% along with a 50% increase in electricity costs, owner Ozzy wrote: “12.5% to 20%. BIG leap. The hospitality industry is teetering on the edge as it is especially with the huge surge in costs.

“Only the most resilient have made it this far… Mostly because of the burden of huge loans taken out to survive. The previous VAT decrease helped whilst sales were way down.

“I’ve never seen the sense in businesses buying food with no VAT on it, to then have to charge VAT on it because you’ve cooked it – then its paid for by taxed earnings…”

“Gotta keep on keepin [sic] on. Thanks for dragging us through one and all!”