Speaking in the House of Commons, Sunak said the plan would help protect livelihoods after the economy shrank by 25% in just two months due to Covid-19.
Value added tax will be reduced from 20% to 5% for six months from Wednesday July 15, including food and non-alcoholic drinks.
The reduction will continue until January 12, 2021 and will include take-out meals and meals out as well as hotel, B&B and camping stays.
“These changes are being made as an urgent response to the coronavirus pandemic to support businesses severely affected by forced closings and social distancing,” said a government spokesperson.
This will affect the following purchases:
- Food and non-alcoholic beverages sold for consumption on the premises, for example in restaurants, cafes and pubs
- Hot dishes to take away
- Take-out non-alcoholic drinks
- Accommodation in hotels or similar establishments
- Holiday accommodation
- Pitches for caravans and tents.
Entrances to the following attractions will also be included in the VAT reduction:
- Theme parks
- Similar cultural events and installations