A major new campaign – #VATsEnough – is calling on the Chancellor Rishi Sunak to make the 12.5% VAT rate permanent for hospitality and tourism.
The multi-channel campaign comes in the wake of the VAT rate for hospitality and tourism businesses rising to 12.5%, on 1 October, and under current plans, VAT will return to its pre-pandemic level of 20% come April 2022, just as next year’s peak season begins.
Trade association UKHospitality is now urging customers, suppliers, hospitality venues, and employees to lobby their MPs on the need to lock in the 12.5% VAT rate for local pubs, bars, restaurants, hotels and other sector businesses.
Doing so will enable sector businesses to create 125,000 jobs, rebuild their balance sheets, boost investment, avoid damaging price increases and accelerate the UK’s post-pandemic economic recovery.
A YouGov survey for UKHospitality reveals that half (49%) of the adult population say they will eat out less frequently if prices were increased in restaurants, pubs and cafes.
Industry experts claim that while businesses will pass on savings where possible, an increase in the rate of VAT from current levels will inevitably lead to rises in some prices suggesting that a higher VAT rate will dent customer visits to hospitality venues.
Kate Nicholls, Chief Executive of UKHospitality, said: “We’re launching the #VATsEnough campaign because a failure to act risks the future of hotels, cafés, pubs, restaurants, and myriad other venues and attractions across the country. Our businesses bring light, life and heart to communities across the country but are battling huge challenges in terms of labour shortages and the food supply chain after 18 months of desperate struggle due to the pandemic.
“By introducing a permanent 12.5% rate of VAT in his autumn Budget, the Chancellor can help us bounce back strongly, keep prices affordable for customers and level up UK jobs. Lower VAT will foster investment in businesses and high streets, accelerating our recovery from the pandemic. Let’s lock in VAT at 12.5% permanently.
“We need the whole hospitality sector, its suppliers, employees, and customers to come together and demonstrate to Government how critical the lower rate of VAT is for our sector’s recovery.”
The UKHospitality survey also shows that almost 6 in 10 adults (57%) who have a view believe that the hospitality sector VAT rate should not return to 20% next year and seven in 10 (70%) think the Government has a responsibility to support the sector’s recovery. Across the course of the pandemic, hospitality and tourism were the hardest hit sectors, with 660,000 jobs lost, spend down £100bn and 12,000 licensed venues permanently closed.