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Written question asked by Neil Coyle (Labour) on Wednesday, 2 September 2026, in the House of Commons. It was due for an answer on Friday, 4 September 2026. It was answered by James Murray (Labour) on Thursday, 10 September 2026 on behalf of the Treasury.

Hospitality Industry: VAT

Question

To ask the Chancellor of the Exchequer, what research his Department has commissioned on the impact a lower rate of VAT for hospitality would have on (a) visitor numbers, (b) visitor spend and (c) length of stay of visitors.

Answer

The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK. The potential impacts of changes on this sector are carefully considered as part of policy development.

Where changes are made, relevant impact notes and assessments are published at fiscal events and otherwise as necessary, in line with the Government’s usual practice. The Treasury also engages regularly with the hospitality sector to understand the challenges they face.

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.   Exceptions to the standard rate have always been limited and balanced against affordability considerations.  

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 2026-27, rising to £19.5 billion in 2030-31.

Secondary information

Type
Written question
Reference
26561
Session
2026-27
Grouped for answer
Yes
Subjects
Research Tourism VAT Hospitality industry
Contains statistics
Yes
Link
View this Written question on www.parliament.uk