Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate her Department has made of the costs to the exchequer of reducing VAT for hospitality businesses to (a) 15%, (b) 10%, (c) 5% and (d) 0%.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC estimates that the cost of reducing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services would be as follows in 2026-27: (a) to 15%: £5 billion, (b) to 10%: £10.5 billion, (c) to 5%: £17 billion, (d) to 0%: £23.5 billion.
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether her Department has made an assessment of the potential cost to the public purse of lowering the VAT rate payable by hospitality businesses to (a) 15 per cent, (b) 10 per cent and (c) 5 per cent.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC estimates that the cost of changing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services to the Reduced Rate of 5 per cent would be around £17 billion in 2026-27, rising to £19.5 billion in 2030-31.
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential impact of spirits duty rates on the competitiveness of UK pubs comparted to pubs in Europe.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Alcohol duty is paid by producers, and is therefore not typically paid directly by pubs. Further, according to estimates derived from sales data collected on behalf of the Office for National Statistics, only around 15% of spirits are consumed on-trade.
At Autumn Budget 2025 the Chancellor confirmed that alcohol duty will be uprated on 1 February 2026 to maintain its current real-terms value.
An assessment of the impacts of decisions taken by the Chancellor at each Budget is published within the relevant Tax Impact and Information Note (TIIN). The TIIN for the inflation-linked uprating announced at the most recent Budget is available here:
There is significant variation in alcohol taxation policy amongst European countries. The World Health Organization recently published a comparison of alcohol taxes across the WHO European Region, which can be found here: https://www.who.int/europe/publications/i/item/9789289061940.
HMRC does not hold data on alcohol duty paid on alcohol sold in pubs.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the impact of inflation-linked duty increases on the on-trade in each of the last three years.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Alcohol duty is paid by producers, and is therefore not typically paid directly by pubs. Further, according to estimates derived from sales data collected on behalf of the Office for National Statistics, only around 15% of spirits are consumed on-trade.
At Autumn Budget 2025 the Chancellor confirmed that alcohol duty will be uprated on 1 February 2026 to maintain its current real-terms value.
An assessment of the impacts of decisions taken by the Chancellor at each Budget is published within the relevant Tax Impact and Information Note (TIIN). The TIIN for the inflation-linked uprating announced at the most recent Budget is available here:
There is significant variation in alcohol taxation policy amongst European countries. The World Health Organization recently published a comparison of alcohol taxes across the WHO European Region, which can be found here: https://www.who.int/europe/publications/i/item/9789289061940.
HMRC does not hold data on alcohol duty paid on alcohol sold in pubs.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what data she holds on spirits duty revenue generated from pubs in (a) rural areas and (b) urban areas.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Alcohol duty is paid by producers, and is therefore not typically paid directly by pubs. Further, according to estimates derived from sales data collected on behalf of the Office for National Statistics, only around 15% of spirits are consumed on-trade.
At Autumn Budget 2025 the Chancellor confirmed that alcohol duty will be uprated on 1 February 2026 to maintain its current real-terms value.
An assessment of the impacts of decisions taken by the Chancellor at each Budget is published within the relevant Tax Impact and Information Note (TIIN). The TIIN for the inflation-linked uprating announced at the most recent Budget is available here:
There is significant variation in alcohol taxation policy amongst European countries. The World Health Organization recently published a comparison of alcohol taxes across the WHO European Region, which can be found here: https://www.who.int/europe/publications/i/item/9789289061940.
HMRC does not hold data on alcohol duty paid on alcohol sold in pubs.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate she has made of the potential impact of her Department's plan to introduce a higher multiplier on properties with rateable value of £500,000 and above on the food and drink wholesale sector.
Answered by James Murray - Chief Secretary to the Treasury
To deliver our manifesto pledge, from April 2026, we intend to introduce permanently lower tax rates for high street retail, hospitality, and leisure (RHL) properties with rateable values (RVs) below £500,000.
This tax cut must be sustainably funded, and so we also intend to introduce a higher rate on the most valuable properties from April 2026 - those with RVs of £500,000 and above. These represent less than one per cent of all properties.
The Valuation Office Agency (VOA) has published data on properties with RVs above £500,000 based on the previous valuation, broken down by sector online here:
Every three years, all commercial properties are revalued by the VOA. The 2026 revaluation, which will take effect from April 2026, will update RVs and may, therefore, affect which businesses are within scope of the new higher rate. The revaluation process is ongoing. The VOA are required to publish a draft of all properties’ new RVs this year.
The rates for these new business rate multipliers will be set at Budget 2025 so that the Government can take into account the upcoming revaluation outcomes as well as the economic and fiscal context. When the new multipliers are set, HM Treasury intends to publish analysis of the expected effects of the new multiplier arrangements.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of introducing targeted business rates relief for food and drink wholesalers.
Answered by James Murray - Chief Secretary to the Treasury
To deliver our manifesto pledge, from April 2026, we intend to introduce permanently lower tax rates for high street retail, hospitality, and leisure (RHL) properties with rateable values (RVs) below £500,000.
This tax cut must be sustainably funded, and so we also intend to introduce a higher rate on the most valuable properties from April 2026 - those with RVs of £500,000 and above. These represent less than one per cent of all properties.
The Valuation Office Agency (VOA) has published data on properties with RVs above £500,000 based on the previous valuation, broken down by sector online here:
Every three years, all commercial properties are revalued by the VOA. The 2026 revaluation, which will take effect from April 2026, will update RVs and may, therefore, affect which businesses are within scope of the new higher rate. The revaluation process is ongoing. The VOA are required to publish a draft of all properties’ new RVs this year.
The rates for these new business rate multipliers will be set at Budget 2025 so that the Government can take into account the upcoming revaluation outcomes as well as the economic and fiscal context. When the new multipliers are set, HM Treasury intends to publish analysis of the expected effects of the new multiplier arrangements.
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will increase funding for public services to help ensure the affordability of pay awards.
Answered by Darren Jones - Minister for Intergovernmental Relations
I refer the hon Member to my answer during HMT topical questions today (21 January 2025).
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to paragraph 5.81 of the Autumn Budget 2024, HC295, what assessment she has made of the potential impact of a phased introduction of the carbon border adjustment mechanism on the cost of imported fertiliser.
Answered by James Murray - Chief Secretary to the Treasury
The government will introduce the UK Carbon Border Adjustment Mechanism (CBAM) on 1 January 2027, as first announced in December 2023.
The UK CBAM will ensure highly traded, carbon intensive products from overseas face a comparable carbon price to those produced here, making sure that UK decarbonisation efforts lead to a true reduction in global emissions rather than simply displacing carbon emissions overseas.
UK manufacturers already face a carbon price via the UK Emissions Trading Scheme (ETS). The UK CBAM rate that is charged on imports will reflect the final carbon price paid by domestic industries after support mechanisms (such as free allowances within the UK ETS) have been taken into account. As a result, we expect initial liabilities arising from the UK CBAM to be modest whilst encouraging the supply and use of fertiliser with lower levels of embodied carbon than would otherwise have been the case.
The Government expects that there will be no material impact on UK food prices, as a result of the UK CBAM.
Over the course of the last year, His Majesty’s Treasury and His Majesty’s Revenue and Customs have undertaken significant and comprehensive engagement on the design and implementation of the UK CBAM. This includes discussions with stakeholders in the farming and fertiliser sectors.
The Government Response to the recent consultation on the introduction of a UK CBAM, including a summary of responses, can be found at: https://www.gov.uk/government/consultations/consultation-on-the-introduction-of-a-uk-carbon-border-adjustment-mechanism
Asked by: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to paragraph 5.81 of the Autumn Budget 2024, published on 30 October, what assessment she has made of the potential impact of the carbon border adjustment mechanism on food prices.
Answered by James Murray - Chief Secretary to the Treasury
The government will introduce the UK Carbon Border Adjustment Mechanism (CBAM) on 1 January 2027, as first announced in December 2023.
The UK CBAM will ensure highly traded, carbon intensive products from overseas face a comparable carbon price to those produced here, making sure that UK decarbonisation efforts lead to a true reduction in global emissions rather than simply displacing carbon emissions overseas.
UK manufacturers already face a carbon price via the UK Emissions Trading Scheme (ETS). The UK CBAM rate that is charged on imports will reflect the final carbon price paid by domestic industries after support mechanisms (such as free allowances within the UK ETS) have been taken into account. As a result, we expect initial liabilities arising from the UK CBAM to be modest whilst encouraging the supply and use of fertiliser with lower levels of embodied carbon than would otherwise have been the case.
The Government expects that there will be no material impact on UK food prices, as a result of the UK CBAM.
Over the course of the last year, His Majesty’s Treasury and His Majesty’s Revenue and Customs have undertaken significant and comprehensive engagement on the design and implementation of the UK CBAM. This includes discussions with stakeholders in the farming and fertiliser sectors.
The Government Response to the recent consultation on the introduction of a UK CBAM, including a summary of responses, can be found at: https://www.gov.uk/government/consultations/consultation-on-the-introduction-of-a-uk-carbon-border-adjustment-mechanism