Gyms: VAT
The question
To ask the Chancellor of the Exchequer, whether the government has modelled the net fiscal effect of a reduced rate of VAT on fitness services compared to the reduction in NHS and public costs associated with physical inactivity.
Answered by Dan Tomlinson
Addressing physical inactivity and getting people moving more is important for improving health outcomes, reducing demand on the National Health Service, and supporting economic growth.
The leisure and fitness sector play an important role in supporting the Government’s sickness to prevention shift through providing affordable and accessible opportunities for people to increase their activity levels.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. 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. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
One of the key considerations when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers. Evidence suggests that businesses only partially pass on any savings from lower VAT rates. In some cases, reliefs do not represent good value for money, as there is no guarantee that savings will be passed on to consumers.
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