Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he make an estimate of the cost to the Exchequer of reducing the rate of VAT levied on hospitality businesses to 10 per cent.

The Government introduced a temporary reduced rate of VAT for hospitality on 15 July 2020 to support the cash flow and viability of the sector which was severely affected by COVID-19. The relief, which ended on 31 March 2022, cost over £8 billion. The annual cost of a reduced rate of VAT would be greater now that activity in the sector has recovered.

It was appropriate that as restrictions were lifted and demand for goods and services in these sectors increased, the temporary VAT relief was first reduced and then removed in order to rebuild and strengthen the public finances. In response to more recent pressures on businesses, the Government has since announced a new energy support scheme for business, the Energy Bills Discount Scheme, as well as the further business rates reliefs mentioned in my answer to the Honourable Member’s previous question UIN 147209 on 27^th February.

The Government keep all taxes under review.