Downtown in Business (DIB) has backed calls for a reduction in VAT for pubs, bars, restaurants, hotels and visitor attractions, arguing that the move would boost economic growth, create jobs, strengthen high streets and support the UK’s world-class visitor economy.
The business organisation believes that a cut in hospitality VAT would provide a much-needed stimulus for a sector that sits at the heart of local economies across the country, while helping businesses invest, recruit and grow.
Hospitality businesses continue to face significant pressures from rising employment costs, higher National Insurance contributions, increased energy bills and inflationary challenges. DIB believes that targeted tax reform would allow operators to invest more in staff, premises and customer experience while making Britain a more competitive destination for domestic and international visitors.
DIB group chair and CEO Frank McKenna said:
“Hospitality is one of Britain’s greatest economic assets. It supports millions of jobs, generates billions in economic activity, attracts visitors from across the globe and creates the vibrant city centres and town centres that businesses and communities rely on.”
“Yet the UK continues to impose one of the highest VAT rates on hospitality in Europe. Countries including France, Spain, Italy, Germany and Ireland have all recognised the economic value of their hospitality and tourism sectors through lower rates of VAT. The evidence suggests that this approach encourages investment, stimulates demand and supports employment.”
Research from Ireland, where a reduced hospitality VAT rate has been used to support the sector, demonstrated how lower rates can help drive economic activity, create jobs and strengthen the visitor economy.
McKenna added:
“Too often this debate is framed as a choice between supporting business and protecting tax revenues. In reality, growing the economy is the best way to generate sustainable tax receipts. A thriving hospitality sector means more visitors, more spending, more jobs and ultimately more revenue flowing back to the Treasury.”
“If the Government is serious about growth, then hospitality should be part of the solution. Every thriving city and town depends on successful pubs, restaurants, hotels and visitor attractions. Supporting them is not just good for hospitality businesses – it is good for the wider economy.”
“This sector is also one of the UK’s largest employers of young people, providing hundreds of thousands of first jobs, apprenticeships and career opportunities. A reduction in VAT would not simply help businesses survive and grow; it would support employment, skills development and social mobility in communities right across the country.”
“At a time when politicians of all parties are looking for ways to create jobs and improve opportunities for the next generation, backing hospitality makes both economic and social sense. The Government should seize the opportunity and put this sector at the heart of its growth strategy.”
DIB is calling on ministers to work with industry leaders to develop a competitive VAT regime that recognises the strategic importance of hospitality, tourism, culture and the wider visitor economy to the UK’s future prosperity.
