Hospitality trade bodies are urging the government to cut VAT for the industry as one in six hospitality businesses say they are at risk of closure within the next 12 months.
Almost a quarter (23%) are operating at a loss, up from 15% three months ago, according to a survey by UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster. One in 20 said their business was no longer viable.
Cutting hospitality VAT was overwhelmingly seen as the most impactful step the government could take to support the industry, with 89% of respondents backing the measure.
It comes as a new campaign, #VATsTheProblem, urges the government to cut hospitality VAT to 10%, in line with Europe.
Spearheaded by chef Tom Kerridge, the campaign officially launched to consumers on 1 July and aims to gather a million signatures. It already has more than 240,000.
The UK currently pays the second-highest VAT in Europe, according to UKHospitality. Europe’s average VAT bill is 12.9%, while the UK’s is 20%.
“We are seeing the devastating impact of hospitality’s heavy tax burden escalate before our eyes,” the trade bodies said in a joint statement.
“The reality is stark. The number of businesses now operating at a loss is accelerating rapidly and too many businesses are facing the gut-wrenching decision of whether they have to close their doors for good.
“The government needs to act to back hospitality and reduce its tax burden. The sector is united – a cut to VAT is the most impactful way to support hospitality and drive growth. The government should cut VAT to 10%, bringing the UK in line with Europe.”
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