UK Chefs Demand 10% VAT Reduction for Hospitality Sector Amidst Business Struggles

Four leading UK chefs and restaurant proprietors are pressing the government to reduce Value Added Tax (VAT) for pubs and restaurants, asserting that the current operational climate is the most challenging ever experienced. Tom Kerridge, Yotam Ottolenghi, Ravneet Gill, and Simon Rogan have collectively called for VAT to be cut to 10%, aiming to alleviate financial pressure on businesses and bring UK rates closer to European averages.

Simon Rogan, who holds nine Michelin stars, warned, "We're not making any money whatsoever, and we're just keeping our heads above water." Tom Kerridge echoed this sentiment, suggesting government taxation policies are "very, very wrong."

Cabinet minister Pat McFadden acknowledged that the government had "asked business to contribute more" and that there was a financial cost associated with tax cuts. He stated that the Chancellor must balance such demands against increasing government expenditure.

Yotam Ottolenghi, operating 11 establishments, described the situation as "crippling" for bakeries, cafes, and pubs, not just his own ventures. He highlighted that "Every pound that we take, a substantial amount of it just goes to the government for a different taxation."

The hospitality sector has faced severe challenges, from the cessation of trade during the COVID-19 pandemic to soaring energy prices following the Ukraine conflict, which have inflated costs across the board. Furthermore, the cost of living crisis has led customers to significantly reduce discretionary spending, particularly on dining out. Industry body UK Hospitality reports that three hospitality businesses have ceased trading daily since the beginning of 2026, despite previous temporary support measures like the Eat Out to Help Out scheme and earlier VAT relief.

The standard VAT rate in the UK stands at 20%, the second highest in Europe for hospitality businesses after Denmark. UK Hospitality has consistently campaigned for a reduction, pointing to rates in Germany (7%), Ireland (9%), France (10%), Italy (10%), and Spain (10%).

Kerridge, who manages five restaurants and pubs, cited numerous factors eroding margins, including government policy decisions on National Insurance for employers, business rates, and the minimum wage. He argued the industry has reached a "peak point" where price increases cannot be passed to customers without deterring them. Pastry chef Ravneet Gill, who opened her first restaurant a year ago, admitted she "never imagined it would be this tough," particularly concerning employment expenses.

While supporting the rise in the minimum wage, the chefs believe a VAT reduction to 10% would enable operators to "breathe" and reinvest. Kerridge emphasised this is about "survival" for the industry, not merely passing on cheaper prices to customers. Gill added, "Don't look at us as having profit is a dirty thing. We're not going on fancy yachts and driving expensive cars. We are doing it so we can regenerate our areas that we're in, employ more people."

Last week, Chancellor Rachel Reeves announced a temporary VAT reduction to 5% on certain attractions and children's meals in restaurants during the summer holidays. Gill, however, dismissed this as "a very poor attempt at trying to offer something to hospitality," predicting it would lead to "loopholes, fraud, misuse and no genuine good."

The hospitality industry is a crucial entry point for young people into the workforce, employing 28% of all 18 to 20-year-olds, according to the Institute of Fiscal Studies. However, job opportunities for young people are diminishing, with a recent report by former Labour minister Alan Milburn warning the UK is "at risk of a lost generation." Official figures reveal over one million young people are not in education, employment, or training – the highest level in over 12 years.

Following Milburn's report, the government stated it is creating 300,000 work experience and training placements across various sectors. Treasury minister Torsten Bell conceded that higher taxes are impacting employment, even as rates for 18 to 25-year-olds remain consistent with 2024 levels.

Allen Simpson, Chief Executive of UK Hospitality, reiterated that reducing the cost of employment for businesses is the solution, advocating for policies that make it "economically beneficial to employ young people once again." Rogan noted that when restaurants face pressure, "investing in youngsters and sustainability, they're the first two things that fall by the wayside."

Ottolenghi called for a public debate on "what we're losing" as restaurants close, cautioning against a society where people "sit around at home, look at screens and never interact with each other." He argued the industry bears a significant burden, and easily reduced government taxes could support the employment and skill development of young people.