‘No current plans’ to extend VAT cut

A treasury minister has said there are “no current plans” to further extend the reduction in VAT for the tourism, hospitality and leisure sectors.

In response to a question from Blackpool South MP Scott Benton, Jesse Norman, financial secretary to the treasury and MP for Hereford and South Herefordshire, said: “The temporary reduced rate of VAT was introduced to support the cash flow and the viability of over 150,000 businesses and to protect 2.4 million jobs in the hospitality and tourism sector.

“It was extended in September and extended again and will now run until 31 March of this year. But the relief comes at as significant cost, and while the government keeps taxes under review, it has no current plans to extend it further.”

It was hoped that the chancellor would extend the VAT reduction in his upcoming Budget on 3 March, although hospitality trade bodies had lobbied for the measure to be confirmed sooner.

The Cut Tourism VAT (CTV) Campaign, along with UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions, have said it is “vital” that the reduction is extended “well beyond” March due to the “incremental, long term and devastating impact of Covid-19”.

A survey by the group found that if the VAT rate reverts to 20% in April, there will be further cutbacks, which could mean the loss of 310,000 more jobs in hospitality and tourism.

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