‘Tax break tart’: hospitality tipped to exploit summer VAT cut on children’s meals

Restaurants and pubs are expected to devise “enterprising” schemes 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.Rachel Reeves last month announced a temporary cut in VAT on children’s meals from 20% to 5% between 25 June and 1 September, part of a “Great British summer savings scheme” to support struggling venues and ease pressure on families.The chancellor highlighted the scheme during an appearance by video at last week’s UK Hospitality trade conference that met with a muted reception.Afterwards, leading figures in the sector added their voices to a chorus of ridicule for the “laughable” scheme, contrasting it with the £5bn in extra costs loaded on to pubs, bars, hotels and restaurants since Labour returned to power in 2024.Chris Jowsey, the chief executive of the 1,300-strong pubs chain Admiral Taverns, called the scheme a “joke”, adding that the resulting discount was “so small it’s embarrassing” and that it would not help pubs that do not serve food.He likened the VAT discount to the Covid restrictions affecting pubs, which at one stage effectively allowed venues to serve alcohol as long as it came with a scotch egg. “I suspect you’ll get some enterprising interpretations of children’s menus,” he said.Chris Jowsey of the Admiral Taverns pub group: ‘I suspect you’ll get some enterprising interpretations of children’s menus.’ Photograph: Andy Hall/The ObserverOne restaurant in Kensington, an affluent area in west London, has already found a way to squeeze maximum value from the scheme.The Blue Stoops launched a £25 menu appealing to any “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.“We’re not expecting queues of children demanding snails and anchovy toast, but it has started the right conversations in the pub about why VAT support for hospitality needs to go much further,” it said.A non-alcoholic beer is included, meaning the whole package qualifies for the summer reduction in VAT from 20% to 5%.Clement Ogbonnaya, who owns the Prince of Peckham pub in south London, described the summer VAT discount scheme as a “token gesture” that would do little to help without a permanent cut to VAT rates.“We’re all going to be faking our IDs to show we’re under 18,” he joked.In fact, restaurants and pubs are under no obligation to check that someone ordering a discounted children’s meal is actually a minor.At the UK Hospitality conference, the industry lined up to support a reduction in VAT on hospitality from 20% to 10%, with a petition backing the move attracting more than 200,000 signatures so far. The potential Labour leadership candidate, Andy Burnham, has backed the policy, which is supported by celebrity chefs such as Tom Kerridge and Yotam Ottolenghi. Estimates of the annual cost to the Treasury range from about £10.5bn to £13bn.While the UK rate is 20%, the European average is 12.8%. France, Spain and Italy all charge 10%, and Germany charges 7%.Clement Ogbonnaya of the Prince of Peckham pub said the scheme was a ‘token gesture’. Photograph: Chris Jackson/Getty ImagesIn her video to the conference, Reeves said the government was supporting the industry.Speaking on stage at the event, the hospitality investor and former Dragons’ Den star Sarah Willingham said that when Reeves claimed that Labour was pro-growth, she “nearly spat out my water”.The chief executive of Nightcap, whose brands include the Dirty Martini and Piano Works chains, described the investment climate in the UK as a “shitshow”.Pub bosses, facing soaring energy bills in the fallout from the Iran war, have bemoaned Labour policies including an increase to the national minimum wage, higher national insurance contributions and changes to business rates.“They say they’re doing it for workers but what they’re doing is making it impossible to employ workers because it’s so expensive,” said Matt Francis, owner of the Planet of the Grapes wine bar chain in London.“They think all people who own a business are driving around in a Ferrari with wedges of cash in our pocket.“I’ve only just repaid a loan from the government which I had to take because I was forced to close by them during Covid. My reward is to pay even more tax. I will never vote for them again.”Referring to the summer VAT discount on children’s meals, he said: “We’ve got to the point where it’s laughable, not funny. And there’s a big difference.”A government spokesperson said: “Businesses across the country have welcomed the Great British summer savings scheme which will slash VAT from 20% to 5% on children’s meals, cinema and theatre tickets, and family attractions this summer. This will help families enjoy days out for less while boosting footfall for businesses across the hospitality and leisure sector.“We’re also backing hospitality by reforming business rates, including a £4.3bn support package to limit bills rises, capping corporation tax at 25%, cutting red tape and taking action on the cost of living. We have the right plan to grow the economy and support families and businesses with rising costs.”