These are the UK chains cutting prices for customers after the VAT decrease

Thursday, 16th July 2020, 10:48 am
Updated Thursday, 16th July 2020, 11:26 am
(Photo: GEOFF CADDICK/AFP via Getty Images)
(Photo: GEOFF CADDICK/AFP via Getty Images)

From 15 July until 12 January 2021, hospitality and tourism industries in the UK will see VAT rates cut to 5 per cent instead of the usual 20 per cent.

The measures - announced by Chancellor Rishi Sunak in his ‘mini-Budget’ earlier in June - will make eating out and going on holiday cheaper, and are designed to drive consumers to spend more on industries that have been particularly affected by coronavirus.

“Eat-in or hot takeaway food from restaurants, cafes and pubs; accommodation in hotels, B&Bs, campsites and caravan sites; attractions like cinemas, theme parks and zoos; all these and more will see VAT reduced,” Sunak said.

The price of alcoholic drinks won’t be affected, but food and soft drinks could be noticeably cheaper in the coming months.

Of course, businesses do not have to change their prices to reflect the VAT cut, and not doing so could actually net them more profit - a tempting prospect when the windfall could be used to secure finances hit by lockdown.

Some companies have announced that they will be cutting their prices and passing the savings on to consumers though.

The businesses that have committed to cutting their prices for customers

Nando's is reducing the price of a quarter chicken by 55p , and said it would pass on "100% of the benefits" from the cut to customers.

Starbucks' company-operated stores will pass on the 15 per cent discount on coffee there, although shops and venues with Starbucks licences will be free to make their own decisions on what reductions to pass on.

Similarly, Costa Coffee customers will save on all food and drink eaten in, and all hot takeaway food and drinks, but only in Costa-owned branches.

Certain "fan favourite" menu items at KFC will be cheaper by 50p, while the price of its sharing buckets has reduced by £1.

Greggs customers will see a drop in prices from Saturday 18 July, although many of the bakery's products are already subject to a zero tax rate.

Wetherspoons is reducing prices on meals, coffee and soft drinks, as well as popular beers.

The price of a Pret A Manger takeaway latte has been cut 35p to £2.40, while the price of hot food will be cut from Friday 17 July.

McDonald's has said it is "recommending" that its franchisees cut prices on an array of products.

Honest Burger has said it is aiming to pass on a third of the relief to customers by dropping prices across its 38 UK outlets.

Accor Hotels - which runs Ibis, Mercure, Novotel, and Sofitel hotels - will be passing on VAT cuts to consumers, as will Bourne Leisure - which runs Butlin's, Haven and Warner holiday parks.

Marriott and Park Holidays are also planning to share savings with customers.

What else will be cheaper?

In theory, the list above is just a small snapshot of the businesses that will be offering cheaper products for the next few months.

The VAT cut also applies to sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.

Admissions to theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, and exhibitions could also be cheaper, where these facilities are open.

But individual businesses are free to decide whether to pass the benefits of a lower VAT rate on to customers, so you might not see any changes at all.