Pubs and restaurants across the country are offering discount on food and drink from today after several big chains opted to pass on Rishi Sunak’s VAT cut to customers.

The Chancellor has reduced VAT from 20% to 5% for businesses in the hospitality and tourism industries, in a move to help them bounce back from the coronavirus crisis.

KFC, Weatherspoons, Starbucks and McDonald’s are among the big names who have confirmed they will be reducing prices on popular menu options as a result of the eased tax burden.

McDonald’s has announced that it has recommended that franchisees reduce prices on classic menu items, including 50p off its breakfast meals. From Wednesday morning, diners can also enjoy a 40p reduction on Extra Value Meals, 30p off Happy Meals, and cuts to the McCafe coffee range.

McNuggets, Big Macs, and Quarter Pounders with cheese will also be 20p cheaper.

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Items such as desserts and cold drinks will remain the same price, and prices will not be dropped on McDelivery services. Customers have been told to check prices, because many McDonald’s restaurants are franchised, meaning the franchisee has the ultimate say over prices. 

Fast-food lovers will enjoy similar discounts at KFC. The fried chicken chain is slashing the price of its boneless bucket until Sunday as a result of the VAT cut, with a ‘Bonehead Budget Bucket’ comprising ten mini fillets costing £4.99 instead of the usual £10.

KFC will also offer £1 off sharing buckets and 50p off other menu items.

On Tuesday, Starbucks announced it will pass on the 15% discount on coffee in stores while outlets with Starbucks licences can pass on whatever reductions suit their business.

Pret has also confirmed it will pass on the Chancellor’s VAT cut to customers from today for hot drinks and Friday on hot food. It means a takeaway latte will now cost £2.40, down from £2.75, and an eat-in tuna mayo baguette will be cut from £3.60 to £3.15.

Alcohol is excluded from the VAT cut, but it will apply to food and non-alcoholic drinks from restaurants, pubs, bars and cafes across the UK for six months.

Wetherspoons says it will use the VAT cut savings to reduce prices on food items, coffee and soft drinks from July 15. Although the tax cut doesn’t apply to alcohol, the pub giant said it will reduce the price of some ales as a result.

The chain produced posters praising Chancellor Rishi Sunak as a ‘legend’ after the decision to reduce VAT was announced. Messages including ‘Sunak’s Specials’ and ‘Dishi Rishi’ will be displayed alongside details of the lower prices, which come into effect from today.

Wetherspoons founder and chairman Tim Martin said: ‘Wetherspoons will invest all the proceeds of the VAT reduction in lower prices, spread across both bar and food products, with the biggest reductions on real ale.

‘Wetherspoons has campaigned for tax equality between pubs, restaurants and supermarkets for many years.

‘Supermarkets pay no VAT on food sales and pubs pay 20 per cent.

‘These tax differences have helped supermarkets to subsidise their selling prices of beer, wine and spirits, enabling them to capture about half of pubs’ beer sales, for example, in the past 40 years.

‘A VAT reduction will help pubs and restaurants reverse this trend – creating more jobs, helping high streets and eventually generating more tax income for the government.’

VAT is a tax paid by businesses on the items or services they sell and is typically passed on to consumers in the price they pay for the goods.

The Treasury estimates households could save £160 a year on average, but hospitality and tourism businesses will not be forced to pass on the virus VAT cut to customers. 

Many companies are expected to use the tax relief to shore up finances hit by the lockdown, rather than cut prices.

Mexican restaurant chain Wahaca said it would pass on the cut in full to diners from Wednesday. This means a fish taco dish previously priced at £6.95 has come down to £6.10. Waitrose also confirmed it would reduce prices in its cafes.

But Pizza Hut and Centre Parcs are two firms who have said they were studying the detail of the cut and working out how to respond to it.

Meanwhile, The National Trust said it was ‘reviewing the announcement’, while The National Gallery said that tickets to its Titian exhibition would not fall in price following the cut, because it had ‘lost a lot of money as a result of the lockdown’. 

Merlin Entertainments, which runs Legoland, Alton Towers, Thorpe Park, Warwick Castle, Madame Tussauds and many others, said the VAT cut was a ‘welcome step’ but it remains unclear if it has cut the cost of tickets to its attractions.

Attractions which are ran as charities, such as London Zoo, will not be affected as there is no VAT on their ticket prices.

IHG Group which runs hotels under a number of brands including Holiday Inn and Crowne Plaza, said it would be passing on the cut to corporate bookings, but as a franchised business it could not confirm that all of its outlets would reduce prices.

Best Western, which operates 300 hotels, said it would be reducing the price of rooms and food on bookings made from Wednesday. However, anyone who had already booked a room will be subject to the old rate of 20%.

Chief executive of Visit Britain, Malcolm Bell, said Mr Sunak’s move was to support business, not help holidaymakers.

He told the BBC tourists had called firms and asked for 15% off their holiday booking. 

‘My message to customers is this is to help the businesses, not to reduce the cost of their holiday. It is only a temporary relaxation up to January,’ he said.

The Treasury said they want businesses to pass on the benefit to customers ‘if they can’.

A statement added: ‘But we recognise that many of these businesses have been closed and without income for months, and decisions on prices are ultimately for businesses rather than the government.’

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