Hospitality Industry: VAT

Treasury written question – answered on 11th February 2022.

Alert me about debates like this

Photo of Stephen Morgan Stephen Morgan Shadow Minister (Defence) (Armed Forces and Defence Procurement), Shadow Minister (Education) (Schools)

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of extending the 12.5 per cent VAT rate until the end of 2022 for the hospitality sector.

Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury

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 new rate will end on 31 March 2022.

This relief has cost over £8 billion and, whilst all taxes are kept under review, there are no plans to extend the 12.5 per cent reduced rate of VAT. The Government has been clear that this relief is 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.

Does this answer the above question?

Yes1 person thinks so

No0 people think not

Would you like to ask a question like this yourself? Use our Freedom of Information site.