Hotel and tourism bosses plead for a freeze on the VAT rate at 12.5% ​​| Hotel industry – .

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The bosses of the hotel and tourism industries are begging the government to permanently lower the VAT rate on companies in their sectors to help save thousands of jobs.

The call comes as the tax rate for pubs, restaurants, vacation accommodation and admission to some attractions increases to 12.5% ​​on Friday, after a temporary reduction to just 5% that was introduced in July 2020 to help businesses struggling with the pandemic.

Under current Treasury plans, VAT on hospitality and tourism sector purchases will rise again to pre-pandemic level of 20% in April next year.

A coalition of the UK’s largest hotel and tourism organizations on Friday warned Chancellor Rishi Sunak that lowering the rate to 20% “risks derailing the recovery at a time when businesses are still in survival mode.”

“Companies are at a perilous stage of their recovery after 18 devastating months,” the business organizations said in their joint letter. “Costs are rising and they face many operational challenges, especially with regard to labor and product sourcing. A reduction in VAT has helped many of our businesses to survive so far and was welcome.

“However, returning the VAT to its pre-pandemic level next year would reduce investment, restrict growth, delay the recovery of our tourism and risk even more painful job losses. “

The letter was signed by the heads of UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, Tourism Alliance and the Association of Leading Visitor Attractions.

“We are now asking the Chancellor to commit to introducing a permanent VAT rate of 12.5% ​​in his next budget, later this month,” they wrote. “This will help protect jobs and continue to support our hotel and tourism businesses, which contribute immensely to the economic and social well-being of the country. “

Hospitality executives have said their sector has been hit the hardest in the economy, with collective revenues down by £ 100bn. They said 12,000 businesses had closed permanently due to the pandemic and 660,000 people had lost their jobs in the industry.

A survey of more than 800 member companies found that 77% believed the reduced VAT rate was “important or crucial for viability”, while 60% said if the VAT rate was raised to 20% in April , they would have to cut jobs, and one in 10 companies said they would likely close altogether.

Kate Nicholls, Managing Director of UKHospitality, said: “With the right support and the right conditions, the industry has the potential to be at the forefront of economic recovery.

“In order to stimulate job creation, we urge the government to implement a long overdue reform of corporate tariffs and a definitely lower VAT rate for hotels and tourism to help fragile businesses to get back on your feet. ”

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Businesses are warning consumers to expect price hikes from Friday as they pass the cost of the tax and other rising costs on to consumers.

Sacha Lord, nighttime economics advisor for Greater Manchester and co-founder of the Parklife Festival, said he expected pub drink prices to rise 7-10% as a result of the change.

A survey by the advertising newspaper, The Morning Advertiser, found that 63% of publicans expected to increase their prices.

JD Wetherspoon said he would increase the price of his food by 40 pence per meal from Friday to reflect the change in VAT. The chain, which has 860 pubs, said the VAT increase “would make the entire hospitality industry less competitive.”


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