Hospitality Industry: VAT

(asked on 27th January 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of extending the temporary reduction of VAT for businesses in the hospitality sector beyond 31 of March 2022.


Answered by
Lucy Frazer Portrait
Lucy Frazer
Secretary of State for Culture, Media and Sport
This question was answered on 4th February 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 to 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.

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