Summer Economic Update – what is the impact on the leisure and tourism sector?

The leisure and tourism sector received some welcomed support measures from the Government in the July Economic Update. Rishi Sunak revealed some new initiatives to help boost customer demand as lockdown measures are eased and businesses start to reopen. 

The main headlines were:

Eat Out to Help Out scheme

The Eat Out to Help Out scheme will entitle diners a 50% discount, capped at £10 per head, on eat-in meals in participating restaurants. The scheme will apply to meals taken on Mondays to Wednesdays throughout August, and will include the cost of non-alcoholic drinks. Participating restaurants will be reimbursed by the government for the 50% discount.

We await detail on how VAT will be accounted for on the discount.

A temporary cut in VAT

From 15 July 2020 to 12 January 2021, the rate of VAT will be reduced from 20% to 5% on food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

Over the same period, the VAT will be reduced to 5% on tourist accommodation and attractions including cinemas, theatres and zoos.

Our VAT Partner, Jonathan Main, filmed a webinar discussing these changes which you can watch here. We have also developed a factsheet detailing the ways in which businesses can prepare for a VAT cut rate and the key points to consider.

There were also numerous measures to help employers:

Job Retention bonus

The government will make a £1,000 payment to businesses for every furloughed employee that they bring back to work. To qualify, the employee must be continuously employed until 31 January 2021 at a wage of at least £520 per month. Payments will be made from February 2021. It is unclear whether employees will qualify if they have already returned to work, and further detail will be announced by the end of July.

Kickstart Scheme

The government will fund the cost of wages of newly created jobs for 16-24 year olds who are on universal credit. The subsidy will cover 100% of the national minimum wage plus NIC and auto enrolment pension contributions, for a six-month period.


The government will pay a £1,000 subsidy to businesses who provide young trainees with work experience. These will be offered for 16-24 year olds with Level 3 qualifications and below.


The government will pay £2,000 to employers in England for each new apprentice they hire aged under 25, and £1,500 for apprentices aged 25 and over. The payments will be made for apprentices hired from 1 August 2020 to 31 January 2021.

Further details

For details of other measures that were implemented in the Update, please visit our dedicated Hub page.

Contact us

We will release more information as they are revealed. If you would like further information please contact Colin Johnson.