2026-06-23
Britain’s hospitality industry is under growing pressure from taxes and venue closures, with campaigners and drinks trade figures urging the government to cut value-added tax on restaurants, pubs and bars from 20% to 10%.
The push has gathered support through the #VATsTheProblem campaign, backed by chef Tom Kerridge, UKHospitality and the British Beer and Pub Association. Supporters say the current tax burden is damaging businesses that are central to the country’s food and drink economy, including the wine trade, which relies heavily on restaurants, pubs and wine bars as a main route to market.
Benjamin Jack, writing on June 22, argued that the issue goes beyond restaurant survival and directly affects wine and spirits suppliers. He said wine and spirits account for about half of what is served across the on-trade and typically generate higher margins than beer. For importers, distributors, sommeliers and producers, he said, hospitality venues are where consumers discover new bottles, try unfamiliar grapes and become repeat buyers.
The argument comes as closures continue across the sector. According to figures cited by Jack, 161 British pubs shut in the first quarter of 2026, nearly two a day and 26% more than in the same period a year earlier. Those closures cost about 2,400 jobs, with roughly half of them held by people ages 16 to 24. Over five years, Britain has lost more than 2,000 pubs. Across hospitality more broadly, venues have been closing at a pace of about 21 a week.
Campaigners say many of those businesses are not empty or unwanted but are struggling to remain profitable under rising costs and taxation. VAT has become a central focus because Britain applies a 20% rate to hospitality sales, while Jack noted that France, Spain and Italy apply 10% and Germany applies 7%.
He also said Britain now has the highest wine duty in Europe. According to his account, duty on a typical full-bodied red has risen by close to half in about two and a half years, even as Treasury receipts from those increases have fallen. That combination has sharpened concern among wine merchants and suppliers that further pressure on the on-trade could narrow consumer choice and reduce opportunities for smaller producers to reach drinkers.
That matters for the broader beverages business because restaurants, pubs and bars often serve as the main showcase for wine lists, premium spirits and independent labels that may struggle to gain visibility in supermarkets or other retail channels. If more venues close, importers and distributors could lose not only sales volume but also one of their most effective places to build demand.
Supporters of the VAT campaign point to a temporary government move this summer to reduce VAT to 5% on children’s meals and family attractions as evidence that ministers accept lower rates can offer relief in some parts of hospitality. They are now calling for that logic to be extended permanently across the sector.
The petition tied to #VATsTheProblem is moving toward a target of one million signatures, with a wider public campaign set to begin on July 1. Backers are urging drinks companies, merchants and hospitality operators to sign it and press lawmakers for a permanent reduction in hospitality VAT.