VAT freeze could create over 250,000 hospitality and tourism jobs, study finds

Freezing hospitality VAT at 12.5% could create more than 250,000 jobs over the next ten years and help ‘level up’ parts of the UK, according to a new report.

UKHospitality, the British Beer and Pub Association (BBPA), the Tourism Alliance and the Association of Leading Visitor Attractions have commissioned a study which suggested fixing the rate could set off a cycle of industry investment,

Hospitality VAT was temporarily reduced to 5% to support the industry in 2020. It returned to 12.5% in October 2021 and is due to rise to its pre-pandemic level of 20% from April.

The report claimed that keeping the 12.5% rate over the next decade could create 286,850 jobs, generate an addition £7.7b of additional turnover and deliver £4.6b in fiscal gains to HM Treasury.

This could result in a positive return on the government’s investment in less than five years.

One survey of 815 businesses cited in the study found that if VAT rises to 20%, four in 10 operators expect to see further cutbacks and jobs losses, while 10% might face closure.

A spokesperson for the trade bodies said: “We must now reignite our industry with a long-term approach and vision to our sector recovery. “The report we publish today sets out the undeniable case for making permanent the 12.5% rate of VAT. The tourism and hospitality sectors can truly act as an engine for the UK’s recovery as we look beyond the pandemic.

“As we approach the point in April where the reduced rate comes to an end, we are united in calling on the Government to change course and cancel the planned increase. The economic and societal benefits of making this change would be enormous.”

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