Hospitality Industry: VAT
The question
To ask the Chancellor of the Exchequer, what estimate she has made of revenue lost in 2027/28 by permanently reducing VAT to 5% for hospitality businesses.
Answered by Dan Tomlinson
HMRC estimates that the cost of changing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services to the Reduced Rate of 5 per cent would be around £17 billion in 2027-28
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. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. A reduction on the scale outlined above would have significant implications for the funding of public services.
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