Tourism groups' plea to extend temporary five per cent rate of VAT

The Cut Tourism VAT Campaign, UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions say the cut must be extended well beyond March 2021.

It showed that if the VAT rate reverts back to 20 per cent in April then up to 310,000 jobs could go.

It said the Chancellor has previously extended the end date of the reduced rate from December 2020 to the end of March 2021 and without this cut in VAT a third of hospitality businesses could have closed.

The CTV Campaign, with UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions, has undertaken a survey to assess the impact of lower VAT to date and the likely impact if VAT continues to be applied at 5 per cent or is returned to the higher rate of 20 per cent from April 2021.

If the VAT cut were to continue beyond March 2021 most operators would use it to rebuild through investment and price reductions for consumers as well as continue to meet the costs of Covid compliance.

Graham Wason, Chairman of the CTV Campaign, said: “The results of this survey show not only that reduced VAT has been crucial to the survival of hundreds of tourism and hospitality businesses, but also that what is vitally needed now is the announcement of a continued reduction to boost investment, jobs and the wider UK economy.”

Kate Nicholls, CEO of UKHospitality, said: “The decision of the Chancellor to cut VAT to five per cent last July was one of the few bright spots of the year and stimulated economic growth before the second wave began to hit.

“If the Government wants to see a turbo-charged recovery in communities right across the UK then an extension of the VAT cut is the surest way to do it – creating jobs, investment in our high streets and helping customers get a cheaper hospitality experience.”

Kurt Janson, director of the Tourism Alliance, said: “The temporary reduction in VAT for the tourism and hospitality industry has been vital in protecting businesses, suppliers and employment so returning to a 20 per cent rate would undo all that good work and result in 310,000 job losses.

"We believe that there is also a huge benefit in combining a reduction in VAT for the tourism and hospitality industry with a reduction in the VAT threshold for businesses.”

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