UK chefs call for VAT cut to support struggling hospitality sector
Four leading UK chefs and restaurateurs have urged the government to reduce the value added tax (VAT) on pubs and restaurants from 20% to 10%. They say the current tax rate is putting severe pressure on hospitality businesses, many of which are barely breaking even amid rising costs and reduced customer spending.
Why this matters
The hospitality industry is facing significant financial challenges due to high operating costs, inflation, and a drop in consumer spending on dining out. VAT in the UK is one of the highest in Europe for this sector, and industry leaders argue that a tax cut would help businesses survive, protect jobs, and support young workers entering the workforce.
Key developments
- Chefs Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan spoke to BBC Newsnight, calling for VAT to be halved to 10% to ease the burden on hospitality businesses.
- Simon Rogan described the situation as “not making any money whatsoever” and struggling to stay afloat.
- Tom Kerridge criticized government taxation policies, saying they are “very, very wrong” for businesses.
- Yotam Ottolenghi highlighted the “crippling” effect of taxation on his 11 restaurants, cafes, and delis, noting that a substantial portion of revenue goes to the government.
- Cabinet minister Pat McFadden acknowledged the government has asked businesses to contribute more but noted the challenge of balancing tax cuts with other government spending demands.
- Hospitality industry body UK Hospitality reports that three businesses have closed every day since the start of 2026.
- UK VAT on hospitality is currently 20%, second highest in Europe, compared to rates as low as 7% in Germany and 10% in France, Italy, and Spain.
- Chancellor Rachel Reeves recently announced a temporary VAT cut to 5% on certain attractions and children’s meals during summer holidays, but some industry figures view this as insufficient.
Background
The hospitality sector has faced multiple challenges in recent years. The Covid-19 pandemic halted trade, and subsequent energy price increases due to the war in Ukraine have pushed costs higher. At the same time, many consumers have cut back on discretionary spending, including dining out, due to the cost of living crisis.
Additional costs such as higher National Insurance contributions, business rates, and minimum wage increases have further squeezed margins. Chefs and restaurateurs say they support wage increases but believe VAT cuts would provide much-needed relief and enable reinvestment in their businesses.
Social impact
Hospitality is a major employer of young people in the UK, providing many with their first work experience. However, job opportunities for young people are shrinking, with over one million not in education, employment, or training—the highest level in over a decade.
Industry leaders warn that if restaurants and pubs continue to close, it could lead to fewer opportunities for young workers and a loss of community spaces where people interact socially.
Food author Yotam Ottolenghi emphasized the broader societal risk, saying that losing restaurants could lead to a more isolated society where people spend more time alone at home rather than engaging with others.
What to watch
- Government response to calls for a VAT reduction on hospitality businesses.
- Impact of recent tax and support measures on the financial health of pubs, restaurants, and cafes.
- Trends in employment opportunities for young people in the hospitality sector.
- Further developments in government policy balancing tax revenues and support for struggling industries.
Recommended reading
For more context, see related Peack News coverage and explainers linked below.
