Taxed Out: When VAT Vampires Suck the Life Out of Hospitality

Picture this: you're at a wedding reception, listening to the best man drone on, and all the while your talking about VAT’s stinginess in hospitality. One hour later, your spouse’s eyes have glazed over beyond recognition. Yep, VAT chat is the new party trick for putting people - and their dates - to sleep. But hey, here’s the twist: that snooze-worthy topic is actually a matter of survival for your local pub, café, or restaurant, and I wasn't the only one saying it at the table with our soup course...

The Grim Reality: Venue Closures

Since April 2025, the hospitality sector has been haemorrhaging premises faster than you can say “lovely pint.” The Hospitality Market Monitor reveals Britain lost 374 licensed venues in the first half of the year - roughly two per day, or 62 per month.

Break that math down:

• 14.2% shrinkage compared to pre-pandemic levels—about 16,000 net closures since March 2020

• Food-led venues, especially independents, are being hit hardest—down 2.9% in just one year—while drink-led venues ironically ticked up 1% 

Late-night spots aren't faring better: since 2020, the UK has lost over 26% of its late-night venues—around 800 closures—that's three a week, leaving us with cultural “night-time deserts” .

Pints and Profit: A Thirst for Real Numbers

Let’s talk money—or lack thereof. The average pub is making a measly 12 pence profit per pint sold at around £4.50–£5.15, with taxes (VAT plus excise) gobbling up a third of the total cost.

For context:

• In 2009, pubs earned roughly 84p per pint. Today? 12p. Yes, you read right—barely enough to tip your bartender .

• The average pint price nudged above £5 in early 2025—a first for British boozers—thanks to increases in employer National Insurance, NIC thresholds, wage hikes, and slashed business-rate relief.

Toast to… Closure? VAT & NIC Are Crushing Hospitality

Taxes, dear readers, are not just a fiscal footnote—they’re a full-blown punch to the gut. UKHospitality's chair, Kate Nicholls, puts it bluntly: “**Two hospitality venues closing every day is not just a statistic; it represents the hollowing out of our high streets and communities… This cannot continue.”

Job losses scream louder still: the sector has shed 84,000 jobs since last October’s Budget, and gloomier forecasts expect this to swell to 200,000 by March 2026 . More than half of all job losses since the Budget have been in hospitality—a sector already seven times more affected than the wider economy .

I wrote about this in a 10 page free download, well I actually predicted 100,000 but whos arguing...

Grab it herehttps://www.thechefhub.co.uk/product-page/9-lessons-in-9-months-a-recruitment-guide

Kate Nicholls to the Rescue (Potentially) in November Budget

Cue the spotlight: Kate Nicholls is gearing up to make VAT reform the star of the November Budget, calling for its reduction to help stop hospitality fading into oblivion. She insists that slashing business rates, fixing NICs, and cutting VAT could be the lifeline the sector desperately needs.

For good measure, the LOWEST rates across europe of VAT are;

• Luxembourg – 3% (hotel accommodation, restaurants, cafés, bars)

• Switzerland – 3.7% (hotel accommodation)

• Malta – 7% (hotels, restaurants, bars, cafés)

• Germany – 7% (hotel rooms; restaurants returning to 7% from Jan 2026)

• Poland – 8% (hotels, restaurants, catering – excluding alcohol)

#TaxedOut: Tag, Tag, Tag… for Good Sense

Want to help? Escaping oblivion doesn’t require magic - just smart tagging. Supporting #TaxedOut online can shine a spotlight on the issue, rally your community, and maybe - just maybe - influence the Chancellor’s pen when penciling next budget figures.

(I'm sure SHE knows what she is doing with the abacus...?) Right...?

The mantra: support local. Every pint you buy, plate you dish out, and tag you post can help keep your local alive.

• “VAT: Very Actual Taxing.”

• “Pubs only make pennies per pint - yet somehow, we still spin the wheels of economy with every sip.”

• “When your local closes, it’s not just ‘lights off’ - it’s culture, conversation, and community on mute.”

Bottom Line (and a Bottomless Support Pitch)

1. Venues are closing at an alarming rate - two a day in H1 2025 - thanks to crushing costs .

2. Pint profits have flatlined - as low as 12p per pint; inflation, tax, and regulations are the hangover we can’t shake .

3. Hospitality is bleeding jobs and spaces, even as some regions limp along.

4. Kate Nicholls is fighting for VAT relief in November - but she needs a groundswell of #TaxedOut support to turn the tide. The Autumn budget now formally announced for 26th November.

5. Support your local - a pint, a plate, a tag - because that’s what keeps the heart of hospitality beating.

I mean, you could open a tea store, and "sell" tea, at around £60 per head, have a few tables, and offer a meal in pure generosity of the purchase of tea and never pay VAT again, but, its a model that hasn't been explored much in the UK or anywhere else, but THEORETICALY its possible....

Where as construction companies in the UK have legitimate reverse charges of VAT, zero VAT on new builds, can reclaim VAT, and there is only 5% VAT applied on renovation's or conversions, so it feels very one sided, you buy a tomato at zero Vat, slice it, add salt and some basil, and then charge 20% on it, its also the same argument for small business owners though isn't it - hit a ceiling at £90k, and then charge your clients an extra 20% ??

As always - food for thought.

Thank the Guardian online, UK Hospitality, LADBible, the Caterer, and Kate Nicholls for all the effort and exerts for this blog, only my fingertips were harmed in typing this out....