The Chancellor has been warned some hospitality firms are at risk of going out of business after being hit with “the tax hangover from hell” from today. The Government has increased VAT on hospitality from 12.5 percent to 20 percent.
The current average price of a pint in a pub was £3.98 but is likely to have gone up by as much as 20p overnight.
With Britons drinking as many as 2.3 billion pints in 2021, Mr Sunak now looks set to rake in £449,817,817 more a year from the tax increase, according to findings from the Liberal Democrat.
They warn that pubs and bars risk being hit with a “double whammy” as VAT and national insurance tax both increase on the same day, putting extra pressure on businesses.
The Government announced it was increasing national insurance contributions paid by employers and employees by 1.25 percent each.
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“We should be slashing taxes right now to help people and businesses struggling to get by.
“The Liberal Democrats emergency VAT cut would put £600 back in the pockets of families and help our hospitality sector recover from the pandemic.”
Clive Watson, chairman of the City Pub Group chain which has 45 venues across England and Wales, said the hospitality sector would suffer badly from the increases.
He warned pubs and restaurants could go out of business because of the changes.
“I know the chancellor’s got to recoup the money to pay for Covid but he shouldn’t be suffocating industries that have suffered that badly,” he said.
“As companies try and emerge from Covid a lot of them will just fall by the wayside because of this cocktail of cost increases.”
The Treasury said it had “always been clear” lower VAT rates were a temporary measure to help businesses impacted by Covid.
A spokesman said: “We’ve stood behind the hospitality sector throughout the pandemic with £400billion package of economy-wide support that saved millions of jobs.”