BRITS are set to benefit from cheaper staycations, meals out and beer as VAT has been slashed as part of today's mini-Budget.
VAT (value added tax) will be cut from 20 per cent to 5 per cent for businesses in the hospitality and tourism industry, chancellor Rishi Sunak has today revealed.
The tax cut will take force next Wednesday (July 15) and will remain in place until January 12, 2021.
It's hoped this will encourage people to take staycations in the UK and to spend cash on meals out and trips to the pub, which in turn will boost the economy and may mean struggling hospitality sectors can start taking on more staff.
Mr Sunak said: "VAT on hospitality and tourism is charged at 20 per cent. So I've decided, for the next six months, to cut VAT on food, accommodation and attractions.
"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, from next Wednesday until January 12, from 20 per cent to 5 per cent."
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The chancellor says this is a £4billion saving for the hospitality and tourism sectors that will benefit over 150,000 businesses, as well as helping to protect 2.4 million jobs.
Households are also set to benefit with businesses expected to pass on savings.
Mr Sunak has also today revealed that restaurant and pub meals will be slashed in half from Monday to Wednesday during August.
These industries have struggled during lockdown, as for more than three months they were only allowed to stay open for takeaway orders.
Pubs, restaurants and cafes were only allowed to reopen on July 4 in England.
In Northern Ireland, these establishments were allowed to open from July 3, while in Scotland, beer gardens could reopen from July 6 and indoor restaurants can go back to business from July 15.
Pubs and restaurants in Wales are due to reopen from July 13.
But what is VAT and how will it affect what you pay? Here's what you need to know.
What is VAT?
VAT is a tax paid by businesses to HMRC on the items or services they sell.
But it's typically passed on to consumers in the price they pay for these goods and services.
This means retailers and service providers can choose not to pass on today's VAT savings in full to customers in the form of cheaper prices, but it's hoped they'll do so.
It's worth pointing out that some items are already VAT-free, such as books and children's clothes and footwear.
The measures come as part of Mr Sunak's mini-Budget which revealed a huge package to help boost jobs, particularly for younger workers with the launch of a "Kickstart" employment scheme for 16- to 24-year-olds.
The government will also dish out a £1,000 bonus for employers taking furloughed workers back on.
In addition, a stamp duty holiday has been launched in England and Northern Ireland covering the first £500,000 of a property's value.
It takes force immediately and will last until March 31.
And vouchers worth up to £5,000 each will be available to homeowners to spend on making their property more energy efficient.
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