From the 15th July 2020, until 12 January 2021, the VAT rate for hospitality and tourism businesses has been cut from 20% to 5%, which means that restaurants, hotels and certain attractions will be able to reduce their tax on certain items. This significant move by the Gov. which is expected to cost over £4.1 billion in tax, is intended to boost the tourism sector which has been particularly hard hit.
A number of big high street names have already announced price cuts (Nando’s, McDonald’s and Costa to name a few). It also seems that once again Bourne Leisure are in front (They own Butlin's, Warner and Haven) as we’ve read that they’re passing on the discount to their customers.
We’ve tweeted Haven today to ask for confirmation on this and will keep you posted.
The VAT cut means that companies can choose to cut prices for customers, with the Gov. offering examples of potential savings of £12.50 per night on a £100 hotel room, or a discount of £2.12 on a £16.99 takeaway pizza.
But. And there is a big BUT.
Firms ARE NOT obliged to pass on the VAT cut to customers by dropping their prices. We wonder how park owners will react to this? There’s massive potential savings here for caravan owners, for example…
Ex Vat VAT inc
Pitch Fee Example 20% £3,500 £4,200
Pitch Fee Example 5% £3,500 £3,675
Potential Saving… £525!!!!
However, we also expect that there will be pitch fee increases this year that reflect economic conditions and this will invariably alter this. Much like everything that has happened in the last few months, different park owners will adopt different stances.
At this stage it’s not clear whether this will affect private sales commission as looking at the guidance it doesn’t seem that this will fall into the intended category. We’ve sought some further guidance and will let you know.