Hospitality and tourism bosses in the UK are pleading with the government to permanently lower the VAT rate on businesses in their sectors to help safeguard thousands of jobs.
The appeal comes as the tax’s rate for pubs, restaurants, holiday accommodation and admission to certain attractions rises on Friday to 12.5%, following a temporary cut to just 5% that was introduced in July 2020 to help businesses struggling in the pandemic.
Under the Treasury’s current plans, VAT on hospitality and tourism sector purchases will rise again to the pre-pandemic level of 20% in April next year.
A coalition of the UK’s biggest hospitality and tourism bodies on Friday warned the chancellor, Rishi Sunak, that returning the rate to 20% “risks derailing the recovery at a time when businesses are still in survival mode”.
“Businesses are at a perilous stage of their recovery after what’s been a devastating 18 months,” the trade bodies said in their joint letter. “Costs are increasing and there are numerous operational challenges for them to deal with, specifically around labour and product supply. A reduction in VAT has helped many of our businesses survive to this point and was most welcome.
“However, the return of VAT to its pre-pandemic level next year would curtail investment, restrict growth, set back our tourism recovery and risk yet more painful job losses.”
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UK cases rise after schools return
The number of daily new Covid infections in the UK has risen in the past month after the removal of most pandemic restrictions and as schools and offices reopened, fuelled by the Delta variant. The latest daily figures up to 30 September show that 36,480 people tested positive for Covid-19 across the UK, an increase from the start of the month.
The government said a further 137 people had died within 28 days of testing positive for Covid-19 as of Thursday, bringing the UK total to 136,662. Almost 49 million people have had a first shot of a coronavirus vaccine, about 90% of the adult population. Almost 45 million – about 83% – have had a second.