Campaign to call for permanent 12.5% VAT launched

07-Oct-2021 - Last updated on 07-Oct-2021 at 08:34 GMT

VAT rise: the rate is set to increase back to 20% in March next year (Getty/georgeclerk)

Related tags Legislation Vat ukhospitality Tax

A campaign, urging Chancellor Rishi Sunak to keep the 12.5% VAT rate beyond March next year has been launched by trade body UKHospitality (UKH).

#VATsEnough comes after the VAT rate for the sector increasing from 5% to 12.5% on Friday 1 October.

UKH is calling on customers, suppliers, hospitality venues and employees to lobby their MPs on the need to make the 12.5% VAT rate permanent.

This followed a YouGov poll for the trade body that found more than half (57%) of adults believe the VAT rate for hospitality should not return to the full 20% next year and almost three quarters (70%) believe the Government has a responsibility to support the industry’s recovery.

Pandemic recovery

Moreover, 49% said they would eat out less frequently if prices were increased in pubs, restaurants and cafés, according to the survey.

UKH chief executive Kate Nicholls 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."

Levelling up agenda

She added: “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.”

Greene King CEO Nick Mackenzie said the reduced VAT rate had helped the sector stay afloat during the past 18 months but warned there were continuing long-term challenges.

He added: “At Greene King, we have about 2,800 pubs in communities of all sizes and types, and making 12.5% VAT permanent will allow us to plan, invest, as well as create jobs across the country and support the Government’s levelling up agenda.”

More information can be found here.