Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of reducing VAT rates for small hospitality businesses.
Answered by Dan Tomlinson
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
From 25 June to 1 September the Government is introducing a temporary reduced rate of VAT on family leisure activities and children's menu meals, including those served in cafes. This targeted, temporary relief will help increase footfall for businesses over the summer, getting more people through the door and boosting local economies.
The Government also introduced new permanently lower multipliers for eligible retail, hospitality and leisure properties. These new multipliers are worth nearly £1 billion per year and benefit over 750,000 properties.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Tax reliefs come at a significant cost to the Exchequer, reducing the revenue available for vital public services and have to represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
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