Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether HM Treasury alongside the Department for Digital, Culture, Media and Sport have explored (a) the potential merits of VAT reform for the hospitality sector to match European countries that use a visitor levy and (b) the potential impact of reduced VAT on (i) visitor numbers, domestic and international, (ii) high street spending, (iii) business confidence and (iv) sectoral investment and expansion.

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. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26.  

HMRC estimates that the cost of changing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services to the Reduced Rate of 5 per cent would be around £17 billion in 2026-27, rising to £19.5 billion in 2030-31.