British Chancellor of the Exchequer Rishi Sunak has announced a cut in VAT from 20% to 5% for hospitality and leisure services, putting additional pressure on Ireland to follow suit with a much asked-for hospitality VAT reduction.

The chancellor said the new VAT rate, effective as of Wednesday 15th July, will last until January 2021.  It covers pubs, restaurants, cafés, zoos, and cinemas, and does not apply to alcohol.  It is expected that the overall cost to the treasury will be £4bn.

A new policy has also been announced called ‘Eat out to help out’, which will give people a 50% discount on eating in restaurants and cafes, from Monday to Wednesday throughout August.  Such a scheme has never been tried on a nationwide level before, and the maximum discount per head will be £10.  Businesses will need to register via a website.

The measures were part of an unprecedented package of employment supports intended to assist in the economic recovery from COVID 19.  The chancellor has also pledged £9bn to protect furloughed jobs, kickstart opportunities for young people, and scrap stamp duty until 2021.

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