Trade bodies make further call to keep VAT at 12.5%

By BigHospiality

- Last updated on GMT

Trade bodies make further call to keep VAT at 12.5%

Related tags: Vat, Coronavirus

Hospitality and tourism trade bodies are once again calling on the Prime Minister to keep VAT at its current rate of 12.5%.

Co-ordinated by UKHospitality, the letter argues that keeping VAT low for these sectors will help to accelerate the UK’s economic recovery from the pandemic ‘safeguard the future of businesses and millions of jobs and allow firms to invest in their workforce with higher wages and improved training opportunities’.

Signatories to the letter include: UKHospitality, Night Time Industries Association and the Scottish Tourism Alliance. 

The letter is one of many sent from trade bodies requesting that VAT be kept low. 

With businesses feeling the impact of a multitude of cost pressures and labour shortages, the letter says that keeping VAT at 12.5% on a permanent basis will help keep prices more affordable for customers and unlock investment in local communities and coastal areas across the UK.

“All of us in the hospitality and tourism sectors share that ambition and our businesses are present in all parts of the country, including, crucially, towns around the country that have been left behind, including coastal areas,” the letter states.

“We will be critical to your levelling-up agenda and we are eager to play our part. To facilitate our role there is one crucial lever that Government can pull – to keep VAT at 12.5%.”

“The pressures on business at present are well-documented and are already creating inflationary pressures. Increasing VAT for our sectors back to 20% will push many to breaking point. Retaining it at 12.5% will relieve upwards pressure on prices and will leave people with more money in their pockets, while delivering on our shared goals.”

Dear Prime Minister,

Your Government’s clear message from Conservative Party Conference was abundantly clear: you want to a higher-skilled, higher-wage, higher productivity workforce. All of us in the hospitality and tourism sectors share that ambition and our businesses are present in all parts of the country, including, crucially, towns around the country that have been left behind, including coastal areas. We will be critical to your levelling-up agenda and we are eager to play our part.

To facilitate our role there is one crucial lever that Government can pull – to keep VAT at 12.5%.

The reduced rate of VAT has been critical in the survival of many jobs and businesses in our sector, but it is even more important to our future role in the economy.

The pressures on business at present are well-documented and are already creating inflationary pressures. Increasing VAT for our sectors back to 20% will push many to breaking point. Retaining it at 12.5% will relieve upwards pressure on prices and will leave people with more money in their pockets, while delivering on our shared goals as set out above.

It would also enable us to invest in our people with higher wages and better training opportunities; support our high streets and communities, where our businesses bring people together; and help deliver a greener future, unlocking capital to speed up our programme of decarbonisation.

Of course, there are other challenges facing our sector, including business rates, where reform will help spur urban regeneration. But we are all agreed that the single biggest action Government could take to ensure we maximise our contribution to our nation’s economy and wider community and deliver on our shared goals is to keep VAT at 12.5% on a permanent basis.

Related topics: Business & Legislation

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