Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of reducing VAT on the hospitality sector in line with rates in other European countries on (a) the economy and (b) the tourist industry.
Answered by Dan Tomlinson
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.
HMRC estimate that the cost of a 5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £13 billion this financial year. If the scope were also to include alcoholic beverages, the cost would be approximately £3 billion greater.
We keep all taxes under review, and the Chancellor makes decisions on tax changes at the Budget, in the context of the overall public finances.
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