//Chancellor cuts VAT for tourism

Chancellor cuts VAT for tourism

Rishi Sunak cuts VAT to 5 per cent for hotel rooms and attractions

The chancellor, Rishi Sunak, has announced that VAT will be cut to 5 per cent for hospitality businesses as part of measures to help boost the economy as the UK emerges from lockdown.

The VAT cut, which can be applied to hotel rooms and attractions, will come into force from next Wednesday and apply until January 12.

Other initiatives the chancellor announced include a bonus payment £1,000 per employee that a company brings back from furlough. The payment will apply to all staff being paid at least £520 a month.

Commenting on the announcement, Joss Croft, UKinbound CEO said: “The chancellor’s economic recovery plan clearly recognises the value of hospitality and tourism, and cutting VAT from 20% to 5% and the Eat Out to Help Out scheme will deliver immediate positive impacts for businesses and consumers.  The Job Retention Bonus Scheme will also help tourism and hospitality businesses, but only those that survive into next year. These measures will not help the many businesses involved in inbound tourism who drive regional economies and jobs, and who are on the brink; longer-term support will still be required for these businesses, which have been hit even harder than domestic and outbound.”

Clive Wratten, CEO of the Business Travel Association (BTA), added:  “Today’s announcement gives a limited kickstart to our industry. We welcome the support for returning employees to work and the VAT reduction for UK accommodation. 

“Public confidence will be buoyed by discounted eat-outs in August, allowing for trust in the safety of business travel to grow.”

An ABTA spokesperson said: “We welcome the Chancellor’s announcement, as it is good news for domestic tourism. However, the lack of backing for outbound tourism represents a missed opportunity, as this is a sector that directly provides 220,000 jobs right across the UK and is in urgent need of tailored support. We shall continue to press for additional support measures for the travel and tourism industry in the coming weeks.”

Photo credit: Mara Conan Design

Sam Ballard is a director and co-founder of Waterfront Publishing, creator of ABTA Magazine, Cruise Adviser, Solus and more.