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09 Jul 2020

COVID-19 stimulus package – VAT cut for hospitality, companies to get apprenticeship funding

The hospitality and attractions sectors will benefit from a temporary cut to VAT as part of stimulus measures announced by chancellor Rishi Sunak.

Revealing the details of his "COVID-19 mini-budget" at the House of Commons today, Sunak said the VAT rate on eating out, accommodation and visitor attractions would be cut from 20 per cent to 5 per cent.

In addition, the hospitality sector has been given highly-targeted assistance in the form of a "eat out to help out" policy.

Under the scheme, those dining out between Monday and Wednesday during the month of August will only have to pay for 50 per cent of their bill.

Pubs and restaurants taking part in the scheme can then claim back the money from the government, with Sunak promising that the money will be paid "into the bank accounts of restaurants within five days".

"This moment is unique. We need to be creative," Sunak added.

The announcements are seen as a victory for industry body UKHospitality, which had called on the government to "act decisively" and help a sector that was "hit harder than other sectors and is likely to be hit longer than other sectors".

The measures were welcomed by the tourism and hospitality sector.

Joss Croft, UKinbound CEO, said “The chancellor’s economic recovery plan clearly recognises the value of hospitality and tourism, and cutting VAT and the Eat Out to Help Out scheme will deliver immediate positive impacts for businesses and consumers.

Other announcements included the confirmation that the Job Retention Scheme will not be extended beyond October, bringing the government-supported furlough system to an end.

The government will, however, introduce a Jobs Retention Bonus, which will see businesses receive a £1,000 bonus for each furloughed person they bring back and employ.

The bonus scheme is one of many measures introduced by Sunak to stimulate job creation.

Others include an apprenticeship scheme which will see the government pay companies £2,000 for each apprentice they take on.

There is also a £2bn “kickstart scheme” to create work placements for young people. The scheme will subsidise work placements for young people on Universal Credit, with the government covering 100 per cent of the national minimum wage for 25 hours a week.

• To read the chancellor's speech in full, click here.


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