Treasury responds regarding extension of VAT reduction for tourism sector

18, January 2021

The Treasury was quizzed over the possibility of an extension of the VAT reduction for the hospitality sector on 15 January 2021. The Minister responded saying that there are currently no plans to extend the temporary reduced rate of VAT for tourism and hospitality beyond 31 March 2021.

On 15 January 2021, Caroline Lucas MP (Brighton, Pavilion) asked: "the Chancellor of the Exchequer, pursuant to the Answer of 17 November 2020 to Question 114934, what his Department's review process is for reducing the rate of VAT applied to hospitality, accommodation and attractions beyond 31 March 2021; what criteria will be used in that review process; when he plans to announce the outcome of that review to businesses; and if he will make a statement."

Jesse Norman MP (Hereford and South Herefordshire) responded: "The temporary VAT reduced rate came into effect on 15 July 2020 and was initially scheduled to end on 12 January 2021.

"To continue supporting the cash flow and viability of over 150,000 businesses and to protect 2.4 million jobs, the Government extended the temporary reduced rate of VAT (5 per cent) for goods and services supplied by the tourism and hospitality sectors until 31 March 2021.

"While it keeps all taxes under review, this relief comes at a significant cost to taxpayers, and there are currently no plans to extend the length of the reduced rate further."

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