Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, if she will extend the VAT relief on summer activities to hospitality businesses such as hotels, bars and restaurants.
Answered by Dan Tomlinson
From 25 June to 1 September the Government is introducing a temporary reduced rate of VAT on children's menu meals and family leisure activities
The VAT relief is temporary — running over the summer months only —providing targeted support without undermining the public finances and the fiscal rules. This entails a near term cost but, combined with the announcement of reforms to the Foreign Branch Exemption which we expect to raise hundreds of millions a year, this package will not increase borrowing in the medium term.
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. HMRC estimates that the cost of reducing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services to 5 per cent would be in 2026-27 £17 billion.
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