BRITS could enjoy cheaper holidays and meals out until March as Chancellor Rishi Sunak is set to extend his VAT cut for businesses.
VAT (value added tax) was slashed from 20% to 5% for the hospitality industry as part of Mr Sunak’s mini-Budget on July 8.
Chancellor Rishi Sunak will reveal his Winter Economy Plan today
The tax cut was due to remain in place until January 12, 2021, but the Chancellor could now extend this until March, reports The Times.
Mr Sunak will update MPs on his plan for the economy this afternoon as part of his Winter Economy Plan.
VAT is a tax paid by businesses to HMRC on the items or services they sell and is typically passed on to customers in the price they pay for goods and services.
However, firms aren’t required by law to pass on the saving to consumers.
If the savings are passed on in full, it means cuts of 12.5% on the end price people pay.
In terms of holidays, the saving could cut £300 off a one-week family staycation.
When the VAT cut was first announced, the Treasury said the reduction is expected to save households around £160 a year on average.
The tax saving is for all businesses in the leisure and hospitality industries, including hotels, restaurants and attractions such as cinemas and theme parks.
The tax cut applies to food and non-alcoholic drinks, as well as accommodation and admission to attractions, but booze is excluded.
The Chancellor is also thought to be considered new ways to help furloughed workers once the scheme ends in October.
It’s thought Mr Sunak could reveal a new “flexible furlough” scheme targeted at industries that will be hardest hit by the new coronavirus restrictions.
The government has been warned by employers and trade unions that if new help isn’t announced, over a million jobs could be at risk.
The Chancellor could also extend coronavirus business loan support for struggling firms as part of his Winter Economy Plan.
Cuts to VAT came alongside the government’s Eat Out to Help Out scheme, which saw diners get 50% off meals, up to £10 a head, throughout August.
Here are some of the furlough replacements Mr Sunak could be considering today.
The Chancellor first hinted that a new package of support could be on the cards last week.
