The Government’s decision earlier this summer to reduce VAT to 5% for hospitality and tourism businesses until January 2021 is widely viewed as a boon for the sector as it works to recover from the impact of the Coronavirus lockdown, facilitating price cuts and helping to heal devastated business incomes.
According to the trade body, prior to the cut the UK’s rate of VAT for accommodation and tourism attractions was approximately twice the average of other major European destinations such as Spain, Germany and Italy, imposing higher costs and stifling demand.
MPs from the Conservative Party, Labour, the SNP and Liberal Democrats each suggested that an extension of the reduction in VAT beyond January would be an effective way to protect businesses over the winter and stimulate the UK’s tourist economy.
"The expression of so much cross-party backbench support for extending the VAT cut is a very positive signal that the value of hospitality and tourism is rightly being recognised," says Kate Nicholls, UKHospitality chief executive.
"As we move away from the peak tourism season, it is encouraging to see all parties looking at ways in which Government can support these vital sectors through the winter.
"A permanent cut in VAT would level the playing field with the UK’s international competitors, enabling tourism and hospitality businesses to survive over the winter, before helping to drive the UK’s economic recovery in 2021.”