VAT Reduction: Tourism and Hospitality

Part of Treasury – in the House of Commons on 27th April 2021.

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Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The temporary reduced rate of VAT aims to support the cash flow and viability of around 150,000 businesses and to protect more than 2.4 million jobs. As was announced at the Budget, the Government extended the temporary reduced rate of VAT to 31 March 2022, with a phased return to the standard rate. This relief alone is estimated to be worth more than £7 billion to the tourism and hospitality sectors. Applying it permanently would come at a very significant cost to the Exchequer, and that would have to be balanced by increased taxes elsewhere or reductions in Government spending.