Scottish Grocers’ Federation is seeking clarity around the VAT changes announced by the Chancellor of the Exchequer, Rishi Sunak, in his Summer Statement yesterday (8 July 2020).
As part of a £30bn plan to stave off mass unemployment caused by the coronavirus crisis, Sunak heralded a temporary VAT cut for food and non-alcoholic drinks from 20% to 5%. This runs from 15 July 2020 to 12 January 2021 and applies to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
However, it is uncertain whether the cut also applies to food-to-go sold from convenience stores.
SGF chief Executive Pete Cheema called on the UK government to shed light on the matter.
He said: “The food-to-go offering provided in Scottish convenience stores is a growing and popular service enjoyed by customers. It is also an important source of revenue for retailers with 20% of stores now having a hot food counter or cabinet.”
Cheema also called on Sunak to consider extending the cut in VAT to the retail sector as a whole “to kick-start the economy”.
The Chancellor also announced an ‘Eat Out to Help’ scheme which will entitle diners to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment.
Cheema said this should extended to include takeaways and the convenience sector: “Retailers will be at the very heart of the national recovery plan and it is vital that they are supported.”
Other measures in the Summer Statement included the introduction of a Job Retention Bonus which would involve a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021.
There will also be a temporary Stamp Duty Land Tax cut in England and Northern Ireland, from £125,000 to £500,000.
Furthermore, the Scottish Government will receive an additional £800m through the Barnett Formula.
Cheema said this presented a “great opportunity” for the Scottish Government to align Scotland’s Land and Buildings Transaction Tax with the Stamp Duty holiday cut for England and Northern Ireland.
“This would stimulate the Scottish convenience market and play an important role in the recovery plan by protecting and creating jobs in convenience retail. There are a lot of empty properties and such a move would incentivise retailers to buy.”
The UK Government’s Budget and Spending Review will take place in autumn 2020.