C-stores to benefit from VAT cut and pavement licensing

By Liz Wells in Industry News 9th July 2020

The government has confirmed that convenience stores and other small shops will be able to benefit from the reduced rate of VAT on specific food and drink sales, and that the sector will be able to apply for pavement licences.

During his Summer Statement yesterday (8 July), chancellor Rishi Sunak announced that the rate of VAT would be cut from 20% to 5% on eat-in or hot takeaway food, mentioning cafes, pubs and other hospitality businesses as those that would benefit. The Treasury has now confirmed that if any vendor provides food and drink for consumption on the premises, or hot takeaway food or drinks, then those supplies are eligible for the reduced rate. Cold takeaway food and drinks are not included in the reduced rate. The reduced VAT rate will apply from 15 July 2020 to 12 January 2021.

In addition, the Ministry of Housing, Communities and Local Government will soon be publishing guidance on applying for pavement licences. Retailers will be able to apply, with a maximum seven-day application process and a maximum £100 fee, for a pavement licence along with other food businesses.

ACS chief executive, James Lowman, said: “Foodservice is a significant growth area in the convenience sector, which will receive even more of a boost during the reduced VAT period, and with customers able to eat food at tables put outside the store.”