Reducing VAT for hospitality sector would benefit all

No one on the Island needs reminding about the importance of the hospitality sector, but is it recognised in Westminster?   

According to UKHospitality, that represents the industry, it is critically important to the UK economy today, contributing over £100 billion, when exports are included. 

The sector employs 3.5 million, with another three million in related fields and the supply chains…..the third largest employer, and it is almost entirely managed by SMEs.

A recent report estimated that the sector could increase its direct contribution to the economy by £29 billion and create another half a million jobs by 2027….”with an enabling and supportive government”.

Therein lies the rub. The key issues today must be the rising cost of materials, staff shortages….and VAT,  and the “value added” is for the Treasury, not for the owner of the restaurant, hotel or pub!

 Very few customers realise that their bill includes a 20 per cent tax!

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As with every tax, the VAT rules are complex, for example hot takeaway food is subject to VAT, but not cold. 

Service charges are subject to the standard rate, but not tips.

The priority for UKHospitality, and every business in this sector, should be to lobby hard for a permanent reduction in VAT from 20 to five per cent, which would dramatically improve profitability, and attract new investment in this important sector of the economy.