Parliamentary Search

Written question asked by Gregory Campbell (Democratic Unionist Party) on Friday, 15 October 2021, in the House of Commons. It was due for an answer on Wednesday, 20 October 2021 (named day). It was answered by Lucy Frazer (Conservative) on Wednesday, 20 October 2021 on behalf of the Treasury.

Hospitality Industry: VAT

Question

To ask the Chancellor of the Exchequer, if he will extend the 12.5 per cent VAT rate for the hospitality sector beyond 31 March 2022.

Answer

The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors. As announced at Budget 2021, the Government has extended the temporary reduced rate of VAT of 5% for the tourism and hospitality sector. This relief ended on 30 September. On 1 October 2021, a new reduced rate of 12.5% was introduced to help ease affected businesses back to the standard rate. This new rate will end on 31 March 2022.

This relief will cost over £7 billion and, while all taxes are kept under review, there are no plans to extend the 12.5% reduced rate of VAT. The Government has been clear that this relief is a temporary measure designed to support the cash flow and viability of sectors that have been severely affected by COVID-19. It is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced and then removed in order to rebuild and strengthen the public finances.

Secondary information

Type
Written question
Reference
56816
Session
2021-22
Grouped for answer
Yes
Subjects
VAT Hospitality industry
Link
View this Written question on www.parliament.uk