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Written question asked by Sarah Olney (Liberal Democrat) on Wednesday, 21 April 2021, in the House of Commons. It was due for an answer on Monday, 26 April 2021 (named day). It was answered by Jesse Norman (Conservative) on Monday, 26 April 2021 on behalf of the Treasury.

Hospitality Industry: VAT

Question

To ask the Chancellor of the Exchequer, if his Department will make the 12.5 per cent VAT rate on hospitality permanent.

Answer

In order to support the cash flow and viability of about 150,000 businesses and to protect over 2.4 million jobs, the Government has applied a temporary reduced rate of VAT (5 per cent) to goods and services supplied by the tourism and hospitality sectors, which will now end on 30 September 2021. On 1 October 2021, a new reduced rate of 12.5 per cent will be introduced for these goods and services to ease affected businesses back to the standard rate. The new rate will end on 31 March 2022.

VAT raised about £130 billion in 2019/20, and helps to fund key spending priorities including on health, schools, and defence. Applying the 12.5% rate permanently would come at a significant cost to the Exchequer, and that cost would have to be balanced by increased taxes elsewhere, or reductions in Government spending.

This is a temporary measure to support the cash flow and viability of sectors which have been severely affected by COVID-19.

Secondary information

Type
Written question
Reference
185447
Session
2019-21
Subjects
VAT Hospitality industry
Link
View this Written question on www.parliament.uk