Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential merits of reducing the rate of VAT for the hospitality sector.
Answered by James Murray
VAT is the UK’s third largest tax. It is forecast to raise £180 billion in 2025/26, which funds public services. VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
HMRC estimates that the cost of a 12.5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £6.5 billion this financial year, or £8 billion if it were to include alcoholic beverages.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →