UK Drinks Industry Calls for Permanent Lowering of VAT Rate
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UK Drinks Industry Calls for Permanent Tax Cuts After Publishing Study Suggesting it Could Save $6.2 Billion

VAT Rate

A man waves a Union Flag during the Castle Howard Proms event on August 21, 2021 in York, England. Three U.K. hospitality and tourism groups are asking for a reduced VAT rate after publishing a study that claimed that doing so would have great economic effects. (Photo by Ian Forsyth/Getty Images)

United Kingdom hospitality and tourism groups UKHospitality, The British Beer and Pub Association and the Association of Leading Visitor Attractions have come together with a shared message to the government: Don’t put an end to the current reduction of value-added taxes (VAT) rate.

The UK government in July announced that it would grant VAT-registered businesses a temporary reduced rate of VAT from 20% to 5% on certain supplies relating to hospitality, hotel and holiday accommodation, and admissions to certain attractions, in order to help businesses stay afloat amid the COVID-19 pandemic.

The reduced rate was set to end in January 2021 but later was extended through the end of March 2021 and then again through the end of September 2021. The rate was increased from 5% to 12.5% in October and is planned to stay that way through the end of March.

UKHospitality, The British Beer and Pub Association and the Association of Leading Visitor Attractions want the 12.5% rate to stay, rather than have it go back up to 20%.

The three organizations together commissioned a study, published Friday, which claimed retaining the current reduced level of VAT could have massive benefits for the hospitality and tourism industry.

The report suggests permanently lowering the rate to 12.5% would create 286,850 jobs over the next 10 years, create £10.4 billion of additional turnover over the next 10 years, deliver £4.6 billion ($6.2 billion) to Her Majesty’s Treasury over the next 10 years and return a positive gain on the government’s investment in less than five years.

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