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Hospitality Industry and Tourism: VAT

Question for Treasury

UIN 153880, tabled on 14 April 2022

To ask the Chancellor of the Exchequer, if he will make it his policy to reduce the VAT rate for the hospitality and tourism sector to 5 per cent; and if he will make a statement.

Answered on

26 April 2022

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 Spring Budget 2021, the Government extended the 5 per cent temporary reduced rate of VAT for the tourism and hospitality sectors until the end of September 2021. On 1 October 2021, a new reduced rate of 12.5 per cent was introduced for these goods and services to help ease affected businesses back to the standard rate. This relief ended on the 31 March 2022.

The Government has been clear that the reduced rate of VAT for hospitality and tourism was a temporary measure designed to support the sectors that have been severely affected by COVID-19. It is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced, and then removed, in order to rebuild and strengthen the public finances.

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