Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, if she will make a comparative assessment of the potential impact of levels of [a] standard and [b] hospitality VAT on the sustainability of the hospitality industry in [i] France, [ii] Germany, [iii] Italy and [iv] the Republic of Ireland.
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 a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Providing further VAT relief or introducing new reduced rates would reduce tax revenue and add further complexity to the tax system.
Furthermore, HMRC estimates that the cost of a 5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £17bn in 2026-27. This would reduce VAT revenue, which pays for public services, by almost 10%.
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