Calls for 5% VAT Rate for Hospitality Businesses


Categories: Local Business, UK Government (Westminster)

Open Letter to UK Chancellor Ahead of Budget

Stirling MP Alyn Smith has written to the UK Chancellor ahead of his upcoming Budget, urging a reduction in VAT to 5% for businesses in the hospitality sector. It follows on from a Westminster Hall debate chaired by Mr Smith, which featured general cross-party support for the measure to back local businesses in these strained economic times.

The move comes as the UK tips officially into recession, with fresh analysis from the Office for National Statistics revealing UK GDP fell 0.3% in the three months to December, undercut by a collapse in retail sales in the run-up to Christmas. The disappointing figures follow a drop of 0.1% in the third quarter of 2023, confirming a second consecutive quarter of falling national output – the technical definition of a recession.

In the open letter, Mr Smith writes that ‘a VAT cut would be proportionate, clean, easy to administer and an effective way to directly boost the bottom line of these crucial businesses.  It would not require any complex bureaucracy and administration as a new grant scheme would, it would simply tax less, relative to the turnover of the business.’

He added:

‘I would urge colleagues from across the House to back this sensible measure, and get behind our much loved and under threat hospitality businesses. Our pubs, restaurants, hotels and cafes all play a huge role in our communities – they keep our high streets busy, they’re community hubs, they give us a sense of place and purpose. Times are especially tough for them at the moment, and with economic woes mounting it is imperative the Chancellor acts swiftly to stem the loss of otherwise viable businesses.

‘We all have such businesses in our constituencies who tell us this initiative could be a lifeline. I urge the UK Chancellor to rise to the occasion, and act now.’

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