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Hospitality Industry: VAT

Question for Treasury

UIN HL3079, tabled on 13 October 2021

To ask Her Majesty's Government what plans they have to extend the 12.5 per cent rate of VAT on hospitality until 2024 to help rebuild the nightlife sector.

Answered on

21 October 2021

The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors. As announced at Budget 2021, the Government has extended the temporary reduced rate of VAT of 5% for the tourism and hospitality sector. This relief ended on 30 September 2021. On 1 October 2021, a new reduced rate of 12.5% was introduced to help ease affected businesses back to the standard rate. This new rate will end on 31 March 2022.

This relief will cost over £7 billion and, while the Government keeps all taxes under review, there are no plans to extend the 12.5% reduced rate of VAT. Applying this relief for a longer period would come at a very significant further cost, with any reduction in tax paid resulting in a reduction in the money available to support important public services, including the NHS and policing.

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