Question to the HM Treasury:

To ask His Majesty's Government whether they explored the merits of VAT reform for the hospitality sector before introducing a visitor levy.

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.

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.

Visitor levies are common in Europe and the rest of the world. All other G7 countries already have some form of tourism or overnight accommodation levy in place. It will be for strategic authorities to decide whether a levy is the right choice for their region and how funds should be reinvested within their areas to drive growth.