Pubs and restaurants are expected to devise enterprising ruses to exploit a tax break on meals for under-18s, after one venue launched a menu for kids featuring wild burgundy snail salad and anchovy butter toast. The scheme, which reduces VAT on children's meals from 20% to 5% between 25 June and 1 September, has been ridiculed by industry leaders as laughable.
Reeves' Summer VAT Cut Draws Criticism
Chancellor Rachel Reeves announced the temporary cut as part of a Great British summer savings scheme to support struggling venues and ease pressure on families. However, the initiative was met with a muted reception at the UK Hospitality trade conference, where Reeves appeared via video link.
Chris Jowsey, chief executive of Admiral Taverns, called the scheme a joke, noting that the resulting discount is so small it is embarrassing and does not help pubs that do not serve food. He likened the VAT discount to Covid restrictions that allowed venues to serve alcohol with a scotch egg, predicting enterprising interpretations of children's menus.
Creative Menu Exploitation
One restaurant in Kensington, the Blue Stoops, has already found a way to maximize the scheme by launching a £25 menu appealing to children keen on wild Burgundy snails with bacon, anchovy butter toast, and beef and oyster pie. The menu includes a dessert called The Tax Break Tart. A non-alcoholic beer is included, ensuring the entire package qualifies for the reduced VAT rate.
The restaurant stated it does not expect queues of children demanding snails and anchovy toast, but the menu has started conversations about the need for further VAT support for hospitality.
Industry Leaders Mock the Scheme
Clement Ogbonnaya, owner of the Prince of Peckham pub in south London, described the VAT discount as a token gesture that would do little without a permanent cut to VAT rates. He joked that everyone would be faking their IDs to show they are under 18. Notably, restaurants and pubs are under no obligation to verify the age of customers ordering discounted children's meals.
At the UK Hospitality conference, the industry rallied behind a petition to reduce VAT on hospitality from 20% to 10%, which has attracted over 200,000 signatures. Potential Labour leadership candidate Andy Burnham and celebrity chefs Tom Kerridge and Yotam Ottolenghi support the policy. Estimates of the annual cost to the Treasury range from £10.5bn to £13bn. The UK rate of 20% compares unfavorably to the European average of 12.8%, with France, Spain, and Italy charging 10%, and Germany 7%.
Broader Economic Pressures
Pub bosses, facing soaring energy bills in the fallout from the Iran war, have bemoaned Labour policies including increases to the national minimum wage, higher national insurance contributions, and changes to business rates. Matt Francis, owner of the Planet of the Grapes wine bar chain in London, criticized the government, stating that it is making it impossible to employ workers due to high costs. He said he will never vote for Labour again, referring to the VAT discount as laughable.
A government spokesperson defended the scheme, saying businesses across the country have welcomed the Great British summer savings scheme, which will slash VAT on children's meals, cinema and theatre tickets, and family attractions. The spokesperson added that the government is backing hospitality by reforming business rates, including a £4.3bn support package, capping corporation tax at 25%, cutting red tape, and taking action on the cost of living.
