A reduction in the VAT payable by business for eat-in & takeaway establishments including takeaway hot drinks and hot food.

During 15th July 2020 & 12th January 2021, this will be reduced to 5%. (Now extended to 31st March 2021).

Including 

• Soft drinks and food in pub's.
• Petrol stations and convenience shops offering takeaway hot drinks and hot food.

Exclusions

• Alcohol.
• Catering companies conducting their normal course of business - thus a pub catering for an event would be excluded.

HMRC GUIDANCE VAT NOTICE 709/1

PRICE - should you adjust your price?

• Retailers do not have to reduce their prices - it is at their discretion. 
• A Radio survey as to whether a business should pass it on to the customers or not was pretty even 50:50. 
• Question was "Should businesses pass on the saving to customers or should they keep the money to as to have a chance at re-building a struggling business sector?"
• FACTORS:
• THE NET EFFECT TO CUSTOMERS IS A 12.5% SAVING. e.g.
• £100 + 20% vat = £120.00
• £100 +   5% vat = £105.00
• £120-£105 = £15 divided by £120 = 12.5%.
• The impact on each customer is minimal
• 12.5% of a £3 cup a coffee is 37p.
• £50 on a family meal at 12.5% is £6.25.
• Neither will break the bank and remains affordable.
• The impact on the retailer is MASSIVE 100 cups of coffee per day in £37 extra revenue, per week £259, per month £1110.
• The hospitality sector has been hit the hardest.
• MY OPINION IS - IF A BUSINESS SURVIVES, MORE PEOPLE RETAIN THEIR JOBS WHICH IS FAR BETTER FOR THE OVERALL ECONOMY - THUS MAINTAIN YOUR EXISTING PRICES.

 Of course there will be local variances within particular communities. If you can afford to pass it onto the customer then do.