Hospitality Sector: Government Assistance

(asked on 15th January 2025) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps she is taking to support the hospitality industry; and whether she has made an assessment of the potential merits of amending VAT for that sector.


Answered by
James Murray Portrait
James Murray
Exchequer Secretary (HM Treasury)
This question was answered on 23rd January 2025
As set out at Autumn Budget 2024, the Government intends to introduce permanently lower business rates for retail, hospitality, and leisure (RHL) properties, with rateable values below £500,000, from 2026-27. Ahead of these changes being made, the Government has extended the current RHL relief for one year at 40 per cent up to a cash cap of £110,000 per business, and frozen the small business multiplier.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

HMRC estimate that the cost of a 5 per cent reduced VAT rate for accommodation, hospitality and tourist attractions would be around £10 billion this financial year. If the scope were also to include alcoholic beverages, the cost would be approximately £3 billion greater.

Reticulating Splines