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.
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.