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Hospitality Industry: VAT

Answer

At £90,000, the UK has the second highest registration threshold among all 38 OECD countries, which keeps the majority of businesses outside the VAT system.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Reduced rates of VAT come at a significant cost to the Exchequer and reduce the revenue available for vital public services. Any reduction in tax revenue would mean higher borrowing, lower spending, or increases in other taxes.

HMRC estimates that reducing the standard rate of VAT to 10% on accommodation and food and beverage services would cost approximately £11 billion a year.

The Government is already supporting hospitality through targeted measures, including permanently lower business rates multipliers, a £4.3 billion business rates support package, and the temporary Great British Summer Savings scheme, which will reduce VAT from 20 per cent to 5 per cent on eligible family attractions and children's menu meals between 25 June and 1 September.

Secondary information

Type

Written question

Reference

9776

Session

2026-27

Grouped for answer

Yes

Subjects

Registration VAT Tax thresholds Hospitality industry

Link

View this Written question on www.parliament.uk