VAT reduction extended for New Year’s revellers

Pubs, restaurants and clubs will be able to charge VAT at the reduced rate until 6am on New Year’s Day, the Government has announced.

In December 2008, the Chancellor cut VAT from 17.5% to 15% in a bid to boost consumer spending during the recession. The higher rate is due to be reinstated on 1 January 2010.

However, Treasury minister Stephen Timms has confirmed that licensees will not have to implement the rate change at midnight as this could cause confusion and discontent amongst New Year’s drinkers. Instead, prices will change six hours later at 6am.

Speaking in the House of Commons, Liberal Democrat MP, Greg Mulholland, urged the Government to consider the timing of the change and the impact it could have on pubs, especially when combined with the ‘ill-judged and damaging’ recent rise in beer.

In response, Mr Timms confirmed that the lower rate would be extended to drinkers until the morning of 1 January. ‘That will be very welcome news, I think, to institutions like those you are concerned about,’ he added.