Call for introduction of 5% VAT rate for hotels

23-Nov-2009 - Last updated on 29-Nov-2010 at 11:29 GMT

Related tags Vat rate Value added tax

A reduced VAT rate would give UK hotels a much needed boost, says PKF

Accountancy firm PKF calls for the re-tabling and support of an Early Day Motion that looks at lowering the VAT rate for hotels to give the industry 'a much needed boost'

Accountancy firm PKF is calling for the re-tabling and support of an Early Day Motion that demands a drop in the VAT rate for hotels to give the industry 'a much needed boost'.

When the UK VAT rate reverts back to 17.5 per cent in January hotels will be paying three times more VAT than in many other European countries. Germany will drop the VAT rate for hotels from 19 per cent to 7 per cent at the start of next year, while in France visitor attractions have a reduced rate of 5.5 per cent.

Richard Wild, director of VAT at PKF, said: "We have one of the highest VAT rates in Europe in respect of tourism, yet whilst other countries are considering and implementing reductions in the rate of VAT in this area, the UK's VAT rate is set to increase."

Wild believes that greater support for the EDM, originally tabled by Rossendale and Darwen MP Janet Anderson, would give the issue more publicity and improve the prospect of change.

He said: "This EDM has again brought to the fore the damage suffered by the UK tourism sector as a result of the comparatively high rate of VAT.

"Whilst the motion has fallen, due to the end of the last Parliamentary session, we would encourage its renewal for the 2009/10 session and for Members of Parliament to sign the Motion and highlight the need for a proper debate on this issue."

UK visitor figures

The call comes as figures from VisitBritain show that 262,000 more visitors came to the UK on holiday in the first nine months of 2009 compared to the same period in 2008, mostly attracted by favourable exchange rates with the euro and the dollar.

However, the new figures show that challenges remain in the business travel sector with the number of business visitors to Britain down 23 per cent in the first nine months of 2009 to 4.9 million, with an annual decline of 18 per cent in the three months to September.

For 2010 VisitBritain predicts 'modest growth' of 1 per cent in visitor numbers to Britain of while visitor spending is expected to increase by almost 4 per cent.