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VAT on Hospitality Cut to 5%. Will the Normal Punter See Any Discounts?

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The chancellor has announced that the government is cutting VAT from 20% to 5% for the hospitality industry.

Do you think that us, the consumer, will see any price cuts? I doubt it very much šŸ˜ 

TheChimp
1 month ago
What do you think of this?
hspexy
hspexy1 month ago

I doubt it too. Iā€™d imagine most will have already hiked up their prices, with no intention of dropping them

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Getsome
Getsome1 month ago

I will be very shocked if they do

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Golfforall
Golfforall1 month ago

TBH I don't really mind . The VAT cut is to help the businesses in the industry .

If they are swamped with customers (unlikely ) they will pocket the VAT cut . If they need to cut prices to get customers then it gives them a bit more margin to do so .

The hospitality product is very much a discretionary spend and there will be those who can't afford it and many who don't want a "cut down" experience due to social distancing .

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1
Ceebers
Ceebers
Mentor
1 month ago

It depends whether businesses register with the scheme. You will get the 50% discount on Mondays - Wednesdays (Eat Out to Help Out Scheme) whilst dining out in August. The business then has to claim this discount back from the government. I think this is only applicable as well to those that are actually eating in.

I sent the details to my local cafe, but they have stated that they are remaining as a take-away for now, due to the social distancing issues.

Xx

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TheChimp
TheChimp
Original Poster
1 month ago

I would really begrudge paying 20% VAT on something just for the provider to pocket 15% of it tbh.

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lornaae
lornaae1 month ago

I wouldn't expect so as this cut is supposed to be to help out businesses, not consumers. Which I understand because the intend of the VAT cut is to keep hospitality businesses afloat. If consumers do see discounts I wouldn't expect it to be too much.

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TheChimp
TheChimp
Original Poster
1 month ago

lornaae So basically the consumer is paying over the odds to help out businesses? šŸ¤”

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lornaae
lornaae1 month ago

TheChimp No, the consumer isn't paying more. The consumer pays the regular price or less but hospitality businesses will be cut a bit of slack to stay afloat. So there's not really any effect on the consumer, although I would expect that many businesses would possibly offer extra discounts during this time as they are able to.

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TheChimp
TheChimp
Original Poster
1 month ago

lornaae But the cost of the product has gone down by 15% due to reduction in VAT.

If I'm paying the same price as it was before the reduction, it's me that's paying an extra 15% as the savings haven't been passed on.

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lornaae
lornaae1 month ago

TheChimp I see what you mean and I can see why you're frustrated seeing it that way. But in actuality you're paying what you normally would for that product and the government are choosing to cut the VAT to support businesses when they expect them to struggle. Personally I wouldn't begrudge paying regular price if and when this is in place or at least I wouldn't expect to see a 20% cut on price for the consumer, that renders the whole scheme pointless really as the purpose isn't to give discount to consumer it's to help businesses.

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TheChimp
TheChimp
Original Poster
1 month ago

lornaae I would have thought that passing on the saving would get more customers, therefore generating more profit.

If I know that I'm paying the same price for something that has become 15% cheaper, where's the incentive for me to use a company's services?

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lornaae
lornaae1 month ago

TheChimp Yes and I expect many businesses will run extra discounts during this time but unlikely 20% discounted. The point of the scheme isn't to incentivise consumers, it's to support businesses during quiet periods. How they then act is up to them.

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TheChimp
TheChimp
Original Poster
1 month ago

lornaae I know what you mean, but my main point is that I'M paying the extra 15% for the companies to pocket. The government have basically passed the buck onto the consumer.

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AgnesFaludi
AgnesFaludi1 month ago

They cut some people`s pay with 30%...How can u spend more when u earn less??????

Maybe pay rise can help, so the working people will earn more to spend more????

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neo1
neo11 month ago

I dont see this as an incentive to help the public out its to help the businesses out. Their profits are still taking a huge hit. If for example they can only seat 50% of the normal amount of customers. They still have the same overheads just by being open why should they pass on the vat cut to the customer

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1
TheChimp
TheChimp
Original Poster
1 month ago

neo1 So I should pay an extra 15% to help them out? It's another big con job.

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Imnotcheap
Imnotcheap1 month ago

I don't normally go out so won't notice a difference

I sometimes take children to kids club at cinema but at Ā£2 each it's cheap anyway

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