VAT cut to 5% today for hotels and restaurants – all the businesses slashing prices named

KFC and Wetherspoons are among the major businesses to pass on VAT cuts to customers from today.

It comes as VAT is slashed from 20 per cent to 5 per cent for businesses in the hospitality and tourism industries across the UK under measures first announced in chancellor Rishi Sunak's mini-Budget last week.

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The cuts will last for six months until January 12, 2021 with the idea being that businesses will pass on the tax savings to households in the form of lower prices.

What's included in the VAT cut?

Booze is excluded from the VAT cut, but it will apply to food and non-alcoholic drinks eaten in at restaurants, pubs, bars, cafés and other similar premises across the UK.

Hot takeaways will also be covered, but cold takeaways won't be - some items such as pre-prepared cold takeaway sandwiches are already VAT-free.

It will also apply to accommodation and on admission to attractions. See the full list in the box below.

How much will I save?

If the savings are passed on in full, it means cuts of 12.5 per cent on the end price people pay.

The Treasury expects typical savings of £160 a year, which it hopes will encourage people to start spending in a bid to boost the floundering economy, which yesterday posted growth of just 1.8 per cent.

But it warns that it won't force businesses to pass savings on, saying it understands many have struggled without an income for months during lockdown.

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It adds that almost four in five businesses (78 per cent) reported passing on savings when VAT was reduced in 2008.

Mr Sunak tweeted today to say he'd already made the most of VAT cuts at Pret. He wrote: "Making the most of @Pret's price cut in response to the VAT reduction that takes effect today for the tourism and hospitality sectors.

"As part of our #PlanForJobs this temporary cut will help over 150,000 businesses protect the jobs of 2.4million people."

Which food chains will pass on VAT cuts?

Here's a round-up of some of the food businesses that have announced VAT cuts:

- full price cut across entire menu

Costa says it will pass on the full 12.5 per cent saving across its food and drinks, including at its self-service Express machines.

The changes will, however, only take place in Costa-owned branches. Shops owned by franchisees are encouraged to pass on savings but they don't have to.

An example of the savings includes 30p (12.5%) off the cost of a Flat White, taking the price from £2.70 to £2.36.

This applies to all food and drink eaten-in, and to all hot takeaway food and drinks.

Cold takeaway food and many cakes and biscuits are currently zero-rated for VAT already.

Greggs - full VAT cuts for hot drinks and home delivery food

Greggs has confirmed it's cut the price of takeaway and home delivery hot drinks from today, while home delivery sausage rolls and pasties will also see a price cut.

But food purchased in stores won't see a price cut because most of these items are VAT-free anyway.

- varying price cuts but not across the whole menu

KFC isn't cutting all menu items by a blanket 12.5 per cent.

Instead, KFC will reduce the price of sharing buckets by £1 and slash the cost of ";fan favourites" by 50p.

It's also introducing a limited time deal on its Boneless Banquet, which will see the price cut by 50 per cent from £10 to £4.99 until July 19.

McDonald's - Happy Meal and Big Mac price cuts

McDonald's has recommended that franchisees reduce prices on classics such as the Big Mac, quarter pounder with cheese and six chicken McNuggets.

This includes a 40p reduction on Extra Value Meals, 30p for every Happy Meal, and 50p on breakfast meals. 

The McCafe range is also set to reduce prices, offering black and white coffee for 99p and premium coffees such as cappuccino and latte for £1.49.

But some items will remain the same price, including desserts and cold drinks.

And the roll back only applies to takeaway and drive thru orders - not to McDelivery. Franchisees also don't have to follow the chain's recommendations.

full savings off all menu items

Nando's is passing on VAT cuts in full across all menu items excluding alcoholic beverages, which aren't included in the VAT reduction.

The price drop will take force across eat-in, delivery and online click and collect orders.

Say you order ½ PERi-PERi chicken on its own, for example, you'll see prices fall by 95p (12.3 per cent) from £7.70 to £6.75, while the price with two regular sides will drop by £1.40 (12.4 per cent) from £11.20 to £9.80.

- price cuts on coffees, eat-in menu, and hot food takeaways

Pret is passing on the VAT cut in full across its hot drinks, eat-in food range, and on its takeaway hot food.

The reduction doesn't apply to takeaway cold food as these items already have a 0 per cent VAT rating.

Examples of savings include an eat-in tuna mayo baguette, which will be reduced by 45p (12.5 per cent) from £3.60 to £3.15, while the price of a takeaway latte will fall by 35p (12.7 per cent) from £2.75 to £2.40.

- 45p off hot drinks

Starbucks will cut a flat-rate of 45p off the cost of all coffee-based drinks it serves in company-operated stores, no matter what size is ordered and whether it's for eat in or takeaway.

This includes hot espresso based beverages such as cappuccinos, flat whites and macchiatos, as well as iced drinks that contain an espresso shot such as iced mocha, iced americano and cold foam iced cappuccino.

In some of stores food purchased to be eaten in will also be discounted, including salad bowls, sandwiches and bakery products.

Takeaway food won't be discounted and other Starbucks franchisees don't have to follow suit but it's hoped they'll pass on the 45p coffee saving.

- varying cuts of up to 28 per cent

Wetherspoons is spreading the cuts across food items, coffee, soft drinks and ale with some items falling in price by up to 28 per cent.

Other items will, however, fall by a smaller 4 per cent or see no decrease at all.

Which hotel chains will cut prices?

Here's a round-up of some of the major chains that have confirmed price cuts for customers.

Accor Hotels - , , , - full savings passed onto future bookings and to food and drink

Accor Hotels, which runs the Ibis, Mecure, Novotel, and Sofitel brands, says it will pass on the savings in full to eligible food and drink prices and to hotel bookings from today.

But it won't apply the changes to current bookings for future stays.

Bourne Leisure - , ,

Butlin’s and Haven have passed on holiday price reductions for new bookings.

We've asked what this means for existing bookings, and for Warner bookings and we'll update this story as soon as we get a response.

- full savings passed onto future and current bookings

Hotel chain Marriott says the full VAT cut will be passed on to future bookings, while those with forward bookings who have already paid will receive a credit for the VAT difference upon check-out or have that amount off-set against any spending during their stay.

- full savings passed onto future bookings

Park Holidays, which owns 31 campsites across the UK, says it too will pass on the full VAT savings to future bookings and to existing ones where holidaymakers have yet to pay.

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Cuts to VAT come alongside the government's new Eat Out to Help Out scheme, which is offering additional savings of up to £10 a head on meals out during August.

Harvester and Pizza Hut are among the firms to sign up for this separate scheme.