UKHospitality calls for targeted package of support in Budget submission

By James McAllister

- Last updated on GMT

UKHospitality calls for targeted package of support in Budget submission VAT reduction business rates relief rent demands

Related tags ukhospitality Business rates Vat cut Vat Coronavirus

UKHospitality has called for a targeted package of post-pandemic support for the sector, including a permanent lower rate of VAT, in its Budget submission to the Treasury.

The trade body warns that businesses are facing a 'triple threat' of punitive business rates, rent demands and an increase in VAT. 

Compounded with the ongoing shortage of staff and severe supply chain issues, it says a targeted package of post-pandemic support for the sector is essential if it is to have any hope of a complete recovery.

In its Budget submission to the Government, UKHospitality is asking for measures including meaningful reform to the business rates system, including a differential, lower rate for hospitality, coming into force in April 2022; a permanent rate of VAT at 12.5% for hospitality and tourism; an implementable and equitable code of practice that mandates a sharing of the pain of rent arrears between landlords and closed sectors, including a 50% rent debt write-off for tenants for all closed periods.

It also calls for an increase to the primary threshold for employer National Insurance Contributions to £12,000; a lower level of excise duty for all categories of alcohol sold in licensed venues; and a sustainable approach to setting future wage rates in order to avoid layering additional costs on fragile businesses.

“The hospitality sector has proved before that it can lead the way out of an economic crisis and since our businesses were permitted to reopen in April 2021, we have seen strong employment growth," says Kate Nicholls, UKHospitality chief executive.

"Given the right conditions we can continue to create jobs, rejuvenate high streets, generate billions in tax and contribute to growth.

“Of all the measures the Government could take to help the hospitality sector secure a more rapid recovery and rebuild resilience faster, the most effective would be to address the unfair business rates system, which requires the sector to overpay by 300% relative to its turnover; the £2.5 billion in rent debt accrued during the pandemic that currently weighs on the sector’s shoulders; and to retain the 12.5% VAT rate for hospitality and tourism to ensure the UK remains competitive in a global tourism market, along with providing consumers with continued affordable prices and creating 125,000 new jobs.”

VAT was temporarily reduced to 5% for hospitality last year to help businesses recover from the pandemic. Last week it rose to an intermediate rate of 12.5%, and is set to return to the full rate of 20% from 1 April 2022.

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