Hospitality Sector: Small Businesses

Treasury written question – answered at on 20 October 2023.

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Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn

To ask the Chancellor of the Exchequer, what fiscal steps he is taking to help support small businesses in the hospitality industry; and whether he has made a recent assessment of the potential merits of reviewing the VAT threshold for those businesses.

Photo of Victoria Atkins Victoria Atkins The Financial Secretary to the Treasury

The Government understands the vital role the hospitality industry plays in the UK economy. This is why, for example, the Government announced a package of business rates support at Autumn Statement 2022 which means businesses in the retail, hospitality and leisure sectors, including pubs, will receive a tax cut worth over £2 billion in 2023-24. Eligible properties will receive 75 per cent off their business rates bill, up to a cap of £110,000 per business.

The Government recognises that accounting for VAT can be a burden on small businesses. At £85,000, the UK has a higher VAT registration threshold than any EU Member State and the second highest in the OECD. This keeps the majority of UK businesses out of VAT altogether. Views on the VAT registration threshold are divided and the case for change has been regularly reviewed over the years. While some businesses have argued that a higher threshold would reduce administrative and financial burdens, others contend that a lower threshold would provide a fairer competitive environment.

The Government continues to keep all taxes under review.

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