Cut VAT for local hospitality – for Pubs, Cafes & Restaurants

Across the UK, our cafes, pubs and restaurants are more than just businesses. They are the beating heart of our communities, the places where we celebrate milestones, share a quiet pint or coffee with a friend and create lifelong memories. And they're struggling to stay afloat.

We simply can't afford to lose another one of our favourite local spots.

Cutting VAT for hospitality could provide a desperately needed lifeline.

With the Autumn Budget approaching, we call on the Government to act now. Support the sector that brings our towns and villages to life and give our local hospitality a fighting chance.

The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK. Pubs, cafes, and restaurants are at the heart of so many communities, and this Government wants to back them.

Since taking office the Government has taken a number of decisions on tax, welfare, and spending to fix the public finances, fund public services, and restore economic stability. This stability is critical to boosting investment and growth, and to making people across the UK better off.

Over 750,000 retail, hospitality and leisure properties will benefit from permanently lower business rates multipliers from April. This support is worth almost £1 billion per year.

At Budget, the Government announced a business rates support package worth £4.3 billion to protect against ratepayers seeing large overnight increases in bills. This means most properties seeing increases will see them capped at 15% or less next year, or £800 for the smallest.

In January 2026, the Government also announced that, from April, every pub and live music venue will get 15% off its new business rates bill on top of the support announced at Budget, ahead of their bills being frozen in real terms for a further two years. The new relief is worth £1,650 for the average pub next year and means that three-quarters of pubs will see bills flat or falling next year.

To consider the regulatory burden of alcohol licensing on hospitality venues, the Government has worked with the hospitality sector to announce the first National Licensing Policy Framework which sets a new strategic direction for licensing authorities and encourages them to have more regard to growth when reviewing licensing applications and decisions. Building on this, we are working with the sector to ensure local authorities are using it to ease licensing decisions ‘on the ground'. In another show of our commitment to the sector, we are pressing ahead with further licensing reform. All pubs and hospitality venues will be allowed to extend opening hours for Home Nation games in the later stages of the Men’s Football World Cup this summer. We will also legislate to increase the number of Temporary Events pubs and other hospitality venues can hold, whether that is to help them screen other national moments, or host community and cultural events. The Government will also explore further loosening of the planning rules to benefit pubs, helping them add new guest rooms or expand their main room without local the need for planning applications. We will continue to engage with the sector to ensure other retail, leisure and hospitality premises also have sufficient planning flexibilities.

Furthermore, the Government is more than doubling the Hospitality Support Fund, with £10m of further funding over three years. This fund will aim to help over 1000 pubs to diversify their business models, improve efficiency and productivity in the sector; and support people who are furthest from the labour market to move into jobs in hospitality. To support this, we are also bringing forward a new High Streets Strategy, to reinvigorate our communities. We will work with businesses and representative bodies to pull this Strategy together. It will be a cross-government strategy, and we will be look at what more government can do to support our high streets.

Turning to the ask to cut VAT for hospitality, the 20 per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been limited and balanced against affordability considerations. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26, which pays for our public services. Tax breaks reduce the revenue available for those public services.

A reduced rate of VAT for pubs, cafes and restaurants would come at significant cost. The VAT relief for tourism and hospitality during the Covid-19 pandemic cost over £8 billion, and was introduced given the exceptional circumstances for the sector.

The Government makes decisions on tax at fiscal events in the context of the overall public finances.

HM treasury