Eat Out to Help Out | FAQs
What is the Eat Out to Help Out Scheme?
***The Government’s Eat Out to Help Out scheme has now ended, however on Thursday 24th September the Chancellor announced that the Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March 2021***
It’s a Government-funded UK-wide scheme designed to incentivise consumers to eat out on quieter days, helping businesses build their trade back up.
How does it work?
A discount of 50%, up to £10 per person is given to consumers, for food and drink supplies made on Mondays, Tuesdays & Wednesdays in August 2020. The discount is funded by the Government. There is no minimum spend.
Are only restaurants eligible?
Eligible establishments are those where food and drink are sold for immediate on-premises consumption. These include;
- Pubs that serve food
- Hotel restaurants
- Restaurants & cafes within tourist attractions, holiday sites & leisure facilities
- Dining rooms within members’ clubs
- Workplace and school canteens
Are all supplies eligible for the discount?
The discount can be applied to food / non-alcoholic drinks purchased for immediate consumption on the premises up to a maximum discount of £10 per person (inclusive of VAT). This includes soft drinks and packaged snacks, but excludes food or drink to be consumed off-premises, tobacco products and food & drink sold as part of a private party or function. Any service charge is also excluded from the scheme.
How will the Government contribution be calculated?
The Government will fund 50% of the eligible food & drink spend, up to a maximum of £10 Including VAT per diner. The eligible spend is after the deduction of any other special offers/vouchers or discount schemes, and any service charge added.
Example of how the scheme works for a £60 bill
A group of four diners (2 adults and 2 children) spend £60, including £10 on alcoholic beverages. There is a 10% service charge bringing the pre-discount bill to £66.
|Bill before service charge and discount||£60.00|
|Amount spent on alcohol||(£10.00)|
|Amount that discount can be applied to||£50.00|
|Discount to consumer (50% of £50)||(£25.00) (suppliers claim this from HMRC)|
|Bill after discount applied||£41.00|
The total discount is £25, which is £6.25 per diner (£25.00 / 4) and is below the £10 per diner ‘cap’.
How is VAT calculated?
VAT is due at
20% on alcoholic drinks
5% on Food & non-alcoholic drinks
And must be based on the pre-discount amount due.
Example of a VAT calculation
A group of 4 diners have a bill of £50, which includes £8 on alcoholic drinks at your establishment. This means that the scheme only applies to £42 of the overall bill.
|Bill before discount||£50.00|
|Amount spent on alcohol||£8.00|
|Amount that the discount can be applied to||£42.00|
|Uncapped discount to consumer (50% of £42)||(£21.00) (supplier claims from HMRC)|
|Bill after discount applied||£29.00|
VAT is due as follows;
£8.00 alcohol at 20%: VAT fraction of 1/6 applied = £1.33
£42.00 full undiscounted amount at 5%: VAT fraction of 1/21 = £2.00
Total VAT payable = £3.33.
How do the restaurants & cafes get paid by HMRC?
They register with HMRC and can submit weekly claims for the discounts given. HMRC have undertaken to pay claims within 5 working days and the first claims can be made from 7 August 2020. The claims service will close on 30 September 2020. Any receipts from HMRC under the scheme will be treated as taxable income for personal/direct tax purposes.
Get in touch
If you have any questions on the Eat Out to Help Out scheme, please discuss with your usual MHA Henderson Loggie contact or our VAT contacts noted below.
Alan Davis | VAT Partner & Chairman | firstname.lastname@example.org
Allan Easton | VAT Consultant | email@example.com