VAT's enough? Why the hospitality VAT campaign should matter to every business owner

When a Michelin-starred chef starts a tax campaign, people tend to listen.

This month Tom Kerridge launched #VATsTheProblem, calling on the Government to cut hospitality VAT from 20% to 10%. The argument is blunt: the UK's pubs, restaurants and cafés are being taxed out of existence, and the UK rate sits well above France, Italy or Spain. The petition is chasing a million signatures, has the backing of UKHospitality, the BBPA, the BII and CODE Hospitality, and passed 100,000 names inside its first three days.

But this isn't really a story about restaurants. It's a story about margins — and if you run any business that takes card payments, that should make you pay attention.

The hidden cost nobody talks about

Most customers see a £20 meal and think it costs £20.

The owner sees something very different. They see VAT, wages, National Insurance, energy, rent, insurance, business rates, supplier increases and payment processing fees all competing for a slice of that £20 before a penny of profit is made.

The hospitality argument is that the sector is under extraordinary pressure and that a lower VAT rate would give operators room to invest, hire and keep prices affordable. Whether you back the campaign or not, it raises an uncomfortable question that travels well beyond hospitality: at what point does a business become unsustainable?

The myth of "just sell more"

When profits tighten, the advice is always the same three things — increase sales, put prices up, cut costs.

But what if you've already done all three? Plenty of operators are packed at weekends, fully booked for every occasion, and still struggling to generate meaningful profit, because rising costs quietly consume every gain made elsewhere. Retailers face it. Tradespeople face it. Professional service firms face it.

The challenge often isn't generating revenue. It's keeping enough of it.

Every percentage point matters

This is where good operators miss a trick. They'll spend months negotiating a supplier contract while ignoring the costs that chip away at profit every single day:

• Card processing fees
• Merchant service charges
• Terminal rental
• PCI compliance fees
• Authorisation fees
• Statement and "non-qualified" fees

Individually each one looks trivial. Collectively they run to thousands of pounds a year. And unlike VAT — which is decided in Westminster — these are costs you have the power to influence right now.

If you're not sure which of those lines you're actually paying, that's the easiest thing in the world to check: send us a recent statement and we'll read it back to you in plain English, line by line, with no obligation.

The bigger question

The VAT debate isn't really about tax. It's about sustainability: how much pressure can a business absorb before something gives, and how many independent pubs, cafés and shops can disappear before the high street fundamentally changes.

Kerridge's campaign has started a conversation that reaches a long way past hospitality. The real question is whether owners are paying enough attention to all the costs eating their bottom line — because while some of those costs are set in Westminster, others are sitting on this month's merchant statement.

Are you losing profit without realising it?

At The Payments Expert we help businesses understand exactly what they're paying to take card payments, and where the unnecessary cost is hiding. If you haven't looked properly at your merchant services agreement in a while, now is a good time — send us a recent statement and we'll come back with a like-for-like comparison.

Protecting your margins isn't a hospitality issue. It's a business survival one.