UKH calls for VAT cut to boost tourism

By Rebecca Weller

- Last updated on GMT

Continued demand: UKH calls for VAT reduction to help boost tourism (Pictured: Kate Nicholls)
Continued demand: UKH calls for VAT reduction to help boost tourism (Pictured: Kate Nicholls)

Related tags Legislation Finance Government ukhospitality

UKHospitality (UKH) has called for the Government to address the UK’s lack of competitiveness on the global tourism market, beginning with a cut to VAT for hospitality, tourism and leisure businesses.

The latest figures from the Office for National Statistics​ (ONS) revealed visits to the UK increased 112% year-over-year, generating £30 billion in revenue, but remain 9% down on 2019 levels.

However, measures to support to nation’s hospitality sector, notably a reduction in VAT​, could make the UK more competitive and attractive for foreign visitors, helping visitor numbers return to, and exceed, pre-pandemic levels, according to UKH.

UKH Chief Executive Kate Nicholls said: “These figures are really encouraging and show that tourism is making a strong, albeit delayed, recovery from the pandemic.

Top destination 

“The UK is a top destination for foreign visitors, with our superb hospitality offering, culture and extensive history, and these figures show the continued demand to visit.

“However, it is worrying we still remain almost 10% behind pre-pandemic levels. Our 20% rate of VAT ranks among the highest in Europe and the introduction of tourist taxes in Scotland and Wales will further add to the cost of visiting.”

Earlier this week, Chancellor Jeremy Hunt confirmed the 75% business rates discount for the industry​ would be extended for a further year as well as a freeze to alcohol duty until August 2024 as part of the Autumn Statement 2023​.

In addition, the Chancellor also announced a freeze to the small business multiplier for further year, though the standard multiplier will increase in line with inflation, he said.

Stimulate demand 

A rise to the national living wage​ was also confirmed in the statement which, teamed with rising costs across the board, would “push some businesses over the edge”, according to Loungers founder-chairman Alex Reilley.

Other industry leaders feared the tax cuts announced in the statement would be counteracted by the lack of support with VAT for the sector.

Nicholls added: “A reduced rate of VAT for hospitality, leisure and tourism is proven to stimulate demand, both from abroad and domestically, and generate revenue.

“It is the single biggest measure the Government can introduce to boost the sector and I would urge them to do just that at the earliest opportunity.”

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