Wetherspoon’s is cut the price of all its food and drink by 7.5% on Thursday to highlight the benefit of a permanent VAT reduction for the struggling hospitality industry.
The chain said the move on what is calls “tax equality day” is aimed at demonstrating the unfairness of the differing tax treatment of alcohol and food sold in pubs compared with shops
The initiative means customers will save 75p on every £10 spent.
All food and drinks in pubs are subject to 20 per cent VAT but supermarkets pay zero VAT on food and, according to Wetherspoon’s, use that saving to sell alcohol to customers at a discounted price.
Rates of VAT for the hospitality sector were reduced during the pandemic – to 5% in July 2020, rising to 12.5% from October 2021 and March 2022.
Wetherspoon’s founder and chairman, Tim Martin, said: “ The biggest threat to pubs and the hospitality industry in general is the vast disparity in tax treatment among pubs, restaurants and supermarkets.
“Supermarkets pay zero VAT in respect of food sales, whereas pubs, bars and restaurants pay 20 per cent.
“This tax benefit allows supermarkets to subsidise the selling price of beer.
“Pubs have been under fantastic pressure for decades, because of the tax disadvantages which they have with supermarkets.
“It doesn’t make sense for pubs and the hospitality industry to subsidise supermarkets.
“A VAT cut to 12.5 per cent is needed to ensure that pubs, bars and restaurants do not continue to close, but instead thrive, invest and create new jobs.
“Customers coming to Wetherspoon’s pubs on Thursday 18 September will find the price of their food and drinks to be lower than normal.
“We call on the chancellor to create tax equality.”
Mr Martin’s one day discount has been backed by three of the leading hospitality, pub and beer organisations, UK Hospitality, British Beer and Pub Association and Campaign for Real Ale (CAMRA).
UKHospitality chair Kate Nicholls OBE, said: “ A reduced rate of hospitality VAT across the UK means lower prices and more jobs, leading to the regeneration of our high streets and communities.”
Wetherspoons has 794 pubs, after opening three in the past year and selling nine – but that is down from 955 in 2015. Across the UK around 5000 pubs have shut since 2016.