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

Submitted by Andy Lennox on Wednesday 27th January 2021

Published on Wednesday 3rd February 2021

Current status: Open

Open until: Tuesday 3rd August 2021

Current Signatures: 17,542
(count is updated approximately hourly)

Relevant Departments

Tagged with

Build ~ Building ~ Covid ~ Covid-19 ~ Essential ~ Extend ~ hospitality ~ Hundreds ~ Lockdown ~ March ~ Re ~ Recovery ~ relief ~ Return ~ RISE ~ Rising ~ Tax ~ Thousands ~ US

Petition Action

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

Petition Details

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.

Additional Information

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 Response

The Government responded to this petition on Wednesday 10th 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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