Children’s VAT cut to boost summer spending for four in 10 families

A survey of 2,000 consumers found that the government’s scheme to cut VAT for children’s meals and activities from 20% to 5% this summer will drive increased spending for 41% of families – although the financial benefits will be more limited for restaurants.

Research from RSM UK found that around 44% of families with a household income of £20,000 to £40,000 planned to spend more under the initiative, which will be in effect until 1 September.

More than half of families with a household income of £80,000 expected to increase family days out as a result of the scheme – but 29% of families earning between £40,000 to £80,000 expected to do so.

RSM UK’s head of leisure and hospitality Saxon Moseley said that, while theme parks and cinemas were well-placed to pass on saving for families by reducing ticket pricing at short notice, the business benefit of the Great British Summer Savings scheme would be more limited for restaurant operators.

“The success of the policy will depend on how much of the saving can realistically be passed on to consumers. Restaurants face an uphill task to update systems and re-print menus within a tight timeframe and, given it only covers the summer period, some may feel the administrative burden outweighs the benefits,” she said.

Any hospitality operator that already offers complimentary children’s meals during school holidays, as large numbers of chain and independent restaurants and pubs do, will not benefit from the scheme.

Moseley added that “with the industry calling for the government to go further and permanently cut VAT on hospitality, the temporary measure this summer could be a good trial to demonstrate the wider impact reforms could have”.

Photo: Cultura Creative/Shutterstock