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7th October 2021

Campaign calls for Chancellor to ‘lock in’ low VAT to boost hospitality industry

Written by: Edward Waddell
The #VATsEnough campaign is calling on Chancellor Rishi Sunak to make the 12.5% VAT rate permanent for the hospitality and tourism sectors.

UKHospitality claims doing this would enable businesses to create 125,000 jobs, rebuild their balance sheets and accelerate the UK’s post-pandemic economic recovery. Under current plans VAT will return to its pre-pandemic level of 20% come April 2022, just as next year’s peak season begins.

The trade association is now urging customers, suppliers, hospitality venues and employees to lobby their MPs on the need to ‘lock in’ the 12.5% VAT rate.

A You Gov poll revealed six in ten adults (57%) believe the hospitality sector VAT rate should not return to 20% next year and seven in ten (70%) think the Government has a responsibility to support the sector’s recovery.

According to the survey half of adults (49%) said they will eat out less often if prices were increased in restaurants, pubs and cafés.

Kate Nicholls, chief executive of UKHospitality, said: “We’re launching the #VATsEnough campaign because a failure to act risks the future of hotels, cafés, pubs, restaurants and myriad other venues and attractions across the country.

“Our businesses bring light, life and heart to communities across the country but are battling huge challenges in terms of labour shortages and the food supply chain after 18 months of desperate struggle due to the pandemic.

“By introducing a permanent 12.5% rate of VAT in his autumn Budget, the Chancellor can help us bounce back strongly, keep prices affordable for customers and level up UK jobs. Lower VAT will foster investment in businesses and high streets, accelerating our recovery from the pandemic. Let’s lock in VAT at 12.5% permanently.

“We need the whole hospitality sector, its suppliers, employees and customers to come together and demonstrate to Government how critical the lower rate of VAT is for our sector’s recovery.”

Across the course of the Covid-19 pandemic, hospitality and tourism were the hardest hit sectors, with 660,000 jobs lost, spend down £100bn and 12,000 licensed venues permanently closed.