Hospitality and tourism industry demands PERMANENT cut to VAT to help ‘fragile’ industries as temporary 5% rate brought in during pandemic ends TODAY
- An emergency rate cut from 20% to 5%for hospitality started in July last year
- But it ends today, with the rate going up to 12.5 per cent for six months
- Will return to 20% at the end of March unless changes are made beforehand
- Firms warned that the industry remain brittle and jobs could be at risk
VAT should be permanently lowered for ‘fragile’ hospitality and tourism businesses, ministers were told today as a temporary Covid cut came to an end.
But it ends today, with the rate going up to 12.5 per cent for six months until returning to its original level in April, unless subsequent changes are made.
However, with furlough also ending today, firms warned that businesses in the industry remain brittle and jobs could be at risk.
The public remain cautious and workplaces are not yet at 100 per cent occupancy – with many people choosing to work from home permanently.
Kate Nicholls, chief executive of UKHospitality, said: ‘With businesses currently experiencing a record number of vacancies, our hope is that those seeking employment will consider the varied and exciting opportunities a career in hospitality offers.
‘With the right support and conditions, the sector has the potential to be at the forefront of the economic recovery.
‘In order to drive further job creation, we urge Government to implement a long-overdue reform of business rates and a permanently lower rate of VAT for hospitality and tourism in order to help fragile businesses back on their feet.’
An emergency rate cut from 20 per cent to 5 per cent was brought in by Rishi Sunak in July last year in an attempt to help first hammered by the first Covid lockdown.
Kate Nicholls, chief executive of UKHospitality, said: ‘In order to drive further job creation, we urge Government to implement a long-overdue reform of business rates and a permanently lower rate of VAT for hospitality and tourism in order to help fragile businesses back on their feet.’
Rishi Sunak today unveiled a £500million ‘household support fund’ as ministers moved to wean the UK off Covid cash – with furlough, the universal credit uplift and VAT breaks coming to an end.
The Chancellor said the funding would provide a ‘lifeline’ as the country faces a cost of living crisis over the winter, with supply chain chaos sending inflation and energy bills into overdrive.
Councils will be given money to distribute to struggling families, so they can afford ‘essentials’ such as heating, food and clothes over the coming months. Between three and four million of the poorest households are expected to benefit to the tune of around £100 each.
But the initiative was immediately slammed by Labour as an ‘inadequate sticking plaster’ designed to give the Tories cover as they kick off their party conference this weekend.
Ministers have admitted that jobs will be lost after the furlough scheme ends today, although they insisted there are ‘opportunities’ with huge numbers of vacancies in the economy.
The £20 a week universal credit uplift is also finishing – which was far bigger than the household fund, costing the taxpayer the equivalent of £6billion a year.
The stamp duty holiday and the VAT breaks for hospitality businesses are closing as well.
Meanwhile, the energy price cap coming in on 1 October is going to push energy bills up by £140 on average, just as the supply chain crisis is sending food prices higher.
The government has always insisted that extra money and tax breaks were temporary during the pandemic, and pointed out it would require significant tax rises to raise that kind of revenue.
Mr Sunak said: ‘Everyone should be able to afford the essentials, and we are committed to ensuring that is the case.
‘Our new Household Support Fund will provide a lifeline for those at risk of struggling to keep up with their bills over the winter, adding to the support the government is already providing to help people with the cost of living.’
The new fund will be in place in England over the winter, with people urged to contact their local council for access.