Treasury minister Dan Tomlinson has signalled that pubs and restaurants in Northern Ireland will not receive a special tax cut to maintain price competitiveness with the Republic of Ireland. From July, Ireland will reduce VAT on food, catering and hairdressing businesses from 13.5% to 9%, while in Northern Ireland, as in the rest of the UK, VAT on most hospitality services will remain at 20%.
Minister Cites National Consistency
Responding to a question from Alex Easton, independent MP for North Down, Tomlinson stated: “I do understand that there are different rates of VAT in Northern Ireland than in Ireland. There are different rates of VAT across Europe. I think it’s important, though, that we remember that VAT is a national tax in the UK at 20% across the country and it is important to have that consistency for businesses operating across the UK as a whole.” He added that significant cuts to VAT come with substantial fiscal costs, noting that halving the rate on hospitality would cost the Exchequer around £11 billion.
Alternative Support Announced
Tomlinson highlighted that hospitality firms would benefit from the Great British Summer Savings programme, which begins on Thursday. The scheme cuts VAT from 20% to 5% on children’s meals served in restaurants, children’s and family tickets for cinemas, theatres and exhibitions, and children’s and adults’ tickets to attractions such as theme parks, museums, zoos and soft play centres. The programme will end on September 1.
Industry Calls for Action
Alex Easton had asked the Chancellor to consider a trial or permanent reduction of VAT for Northern Ireland’s hospitality sector to maintain price competitiveness and safeguard jobs. The Northern Ireland Food To Go Association has previously backed a 10% VAT rate. Chief executive Michael Henderson said: “Food-to-go businesses, independent cafes, coffee shops, delis and takeaways are the backbone of many local communities, yet they continue to face unprecedented pressures from rising wage costs, National Insurance increases, energy bills, insurance costs and reduced consumer spending. Since the beginning of this year alone, more than 200 hospitality and food service businesses have closed across Northern Ireland.”
Political Support for Pilot
Robin Swann, the Ulster Unionist Party MP for South Antrim, earlier this month tabled an early day motion in Parliament calling for a 10% VAT pilot in Northern Ireland, which Mr Easton has supported.
