Treasury written question – answered at on 20 April 2026.
Andrew Bowie
Shadow Minister (Energy Security and Net Zero), Shadow Secretary of State for Scotland
To ask the Chancellor of the exchequer, what assessment her Department has made of the potential impact of current VAT rates on closure rates among hospitality businesses.
Dan Tomlinson
The Exchequer Secretary
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. The UK’s VAT rate of 20 per cent is close to the OECD average of 19.3 per cent. The UK also has a higher VAT registration threshold than any EU country and the joint highest in the OECD, at £90,000. This keeps the Majority of businesses out of the VAT regime altogether.
The Government has already started the work of reforming our business rates system by introducing new permanently lower multipliers for eligible retail, hospitality and leisure (RHL) properties. These new multipliers are worth nearly £1 billion per year and benefit over 750,000 properties.
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