Cut hospitality taxes

Sector package

Reform's Save Our Pubs plan contains a five-part hospitality package. The party scores it as neutral by pairing tax cuts with savings from reinstating the two-child benefit limit.

• VAT cut is the largest tax element.
• Beer duty and pub rates also fall.
• Two-child-limit savings are the offset.

Core trade-offs

Pubs and hospitality firms gain lower taxes and possibly higher demand. The offset falls on larger low-income families if the two-child limit is reinstated.

• Hospitality firms and consumers may gain.
• Larger low-income families bear the offset.
• VAT pass-through is uncertain.

Illustrative fiscal impact

+GBP 0.0bn to +GBP 8.0bn. Central estimate: +GBP 2.0bn.

• Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
• 10% VAT rate is the main scale marker.
• Gross costs and receipt offsets are separated in methodology.
• Behaviour and pass-through widen the range.
• This is not an official costing.

Economic impact by 2027-28

• Jobs: May support hospitality jobs, but welfare cuts reduce demand for affected families.
• Wages: No direct wage guarantee; gains may support margins or prices instead.
• Prices: Consumer prices may fall if VAT and duty cuts pass through.
• GDP / productivity: Short-run sector boost; economy-wide gain likely small and distributionally costly.

Assessment

The hospitality tax cuts are targeted at a pressured sector, but the claimed neutrality depends on reinstating the two-child limit. That makes the package a transfer from larger low-income families to hospitality firms and consumers. The economic case is weaker if tax cuts are captured by margins.

Confidence: Medium-low. Reform provides a fiscal table, but pass-through, eligibility and the welfare offset require independent checking.

Main risks

• Child poverty: Reinstating the two-child limit would cut support for larger low-income families.
• Pass-through risk: VAT and duty cuts may support margins rather than lower prices.
• Sector targeting: Other labour-intensive sectors may seek similar VAT and NI relief.

Safeguards

• Do not fund sector tax cuts through child poverty rises.
• Require price pass-through monitoring.
• Target relief by viability, not blanket sector status.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology: Cut hospitality taxes Internal - PolicyLens, 2026
• Value Added Tax and Excises in the Mirrlees Review Academic review - Mirrlees and review team, IFS, 2011
• Business population estimates 2025 Official statistics - Department for Business and Trade, 2025
• Economic and fiscal outlook: business rates receipts Fiscal forecast - Office for Budget Responsibility, 2026
• Save Our Pubs Party policy document - Reform UK, 2026
• Removing the two-child limit: policy note UK government analysis - Department for Work and Pensions, 2026
• Direct effects of illustrative tax changes Official tax data - HM Revenue and Customs, 2026
• What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes Academic article - Benzarti, Carloni, Harju and Kosonen, Journal of Political Economy, 2020
• Our Policies Party policy source - Reform UK, 2026

Other Reform UK policies

• Raise income-tax thresholds
• Cut household energy taxes
• Cut fuel duty by 20p
• Cut stamp duty below GBP 750,000
• Raise inheritance-tax threshold to GBP 2m
• Cut corporation tax to 15%
• Raise VAT threshold to GBP 150,000
• Abolish IR35 rules