Coronavirus (COVID-19)

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Petition Extend the VAT at 5% for hospitality until at least March 2022

Extend the VAT at 5% for another 12 months until March 2022 for Hospitality.

This is an essential lifeline for the Hospitality Industry’s Recovery - and perhaps the single biggest Covid-19 relief measure.l and must be extended if the industry hopes to have any meaningful recovery.

More details

The VAT at 5% was the single biggest recovery mechanism from the last two lockdowns and helped us red-build our businesses
The VAT at 5% will help keep rising inflation and costs down.
The VAT at 5% will encourage re-investment and investment into the industry.
The VAT at 5% will help out Industry return to profitability - helping pay more Corp Tax
The VAT at 5% will help save hundreds of thousands of jobs in the Industry where without this essential recovery mechanism many will now not re-open

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Government responded

This response was given on 10 March 2021

The Government has extended the reduced rate of VAT (5%) for tourism and hospitality to 30 September 2021. To help manage the transition back to 20%, a 12.5% rate will then apply until 31 March 2022.

The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors.

As announced at Budget 2021, the Government has extended the temporary reduced rate of VAT (5%) for the tourism and hospitality sector. The relief will now end on 30 September 2021. On 1 October 2021, a new reduced rate of 12.5% will be introduced for these goods and services to ease affected businesses back to the standard rate. The new rate will end on 31 March 2022.

The hospitality and tourism sectors have been amongst the worst affected by Covid-19 and the extension of the relief and staggered return to the standard rate will help it recover as lockdown restrictions are lifted.

The reduced rate comes at a significant cost to the Exchequer, and this extension will cost almost £5 billion. It is right that as restrictions are lifted and demand for goods and services in these sectors increases, temporary reliefs are reduced and in time removed, in order to rebuild and strengthen the public finances.

Raising £130 billion in 2019/2020, VAT is an important source of revenue for the Exchequer, funding vital public services such as health, education and defence; applying the reduced rate for a longer period would come at a significant cost and reduce our ability to deliver public services.

The Government has made available a wider package of support worth billions which includes extensions to the furlough scheme; New Recovery Loans; grant support of up to £18,000 for retail, hospitality, leisure and personal care businesses; extension to the business rates holiday; mortgage holidays; enhanced Time to Pay for taxes; and VAT deferrals.

HM Treasury

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At 100,000 signatures, this petition will be considered for debate in Parliament

Other parliamentary business

MPs to debate Support for the Hospitality Industry during Covid-19

MPs will debate Support for the Hospitality Industry during Covid-19 on Wednesday 24 March in the main House of Commons Chamber. The subject of the debate has been determined by the Backbench Business Committee.

This will be a general debate. General debates allow MPs to debate important issues, however they do not end in a vote nor can they change the law.

The debate will start after a debate on online anonymity and anonymous abuse.

Watch here this Wednesday: https://www.parliamentlive.tv/Event/Index/4ee11fcd-f567-4897-8c0b-f04de0be4caa

You'll be able to read a transcript of the debate a few hours after it happens: https://hansard.parliament.uk/commons/2021-03-24

Find out more about how Parliamentary debates work: https://www.parliament.uk/about/how/business/debates/

Find out more about the Backbench Business Committee: https://committees.parliament.uk/committee/202/backbench-business-committee/

Budget 2021 - support for hospitality industry

On Wednesday 3 March, the Chancellor Rishi Sunak MP presented the 2021 Budget, setting out the Government's plans for tax and spending over the next year.

The Budget included new support for the hospitality industry. The Chancellor announced hospitality, accommodation and leisure businesses in England will be eligible for a one-off cash grant of up to £18,000 per premises.

The Government will also extend the reduction in VAT (to 5%) for the hospitality and tourism sectors until the end of September, followed by a rate of 12.5% for the six months until 31 March 2022.

Eligible businesses in the retail, hospitality and leisure sectors in England will also continue to receive business rates relief until the end of March 2022.

You can read a summary of the key measures announced in the Budget here:
https://www.gov.uk/government/news/budget-2021-what-you-need-to-know

You can read the Chancellor's full Budget Speech to the House of Commons here:
https://www.gov.uk/government/speeches/budget-speech-2021

Who is the Chancellor?

The Chancellor of the Exchequer is the Government Minister in charge of the Government's tax and spending decisions. They are appointed by the Prime Minister and are one of the most senior Government Ministers.

Find out more about the role and the current Chancellor, Rishi Sunak MP:
https://www.gov.uk/government/ministers/chancellor-of-the-exchequer

What is the Budget?

The Budget is a statement by the Chancellor of the Exchequer, updating MPs on how much the Government is spending, borrowing, and receiving from taxation. The Budget usually happens once per year.

The Budget is also when the Chancellor announces changes to tax and Government spending. This means the Budget is often used to announce new Government policies or changes to existing policies.

Find out more about Parliament's role in scrutinising the Budget:
https://www.parliament.uk/about/how/role/check-and-approve-government-spending-and-taxation/the-budget-and-parliament/

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