Overview
- On Wednesday the Irish government lowered VAT on cafes, restaurants, catering services and hairdressers from 13.5% to 9%, a measure the state estimates will cost about €232 million in 2026 and €681 million next year.
- UK industry figures led by chef Tom Kerridge are campaigning for a permanent cut from 20% to 10% to stop venue closures and protect jobs, citing trade-body research that many firms are loss-making or at risk and that roughly 21 hospitality businesses are failing weekly.
- HMRC and the Treasury say a wholesale cut to 10% would cost roughly £11 billion a year and prefer targeted, temporary reliefs such as seasonal VAT reductions for children’s meals and reforms to business rates.
- Critics and international bodies including the IMF warn Ireland’s cut will also benefit large chains and could weaken VAT revenue, adding to concerns about reliance on narrow tax bases and long-term public finances.
- The policy gap has intensified political pressure in the UK, with a large public petition and industry backing likely to shape debates over fiscal trade-offs and the future of jobs and training in hospitality.