VAT for pubs, restaurants, holiday accommodation and entry to certain attractions increased from 5% to 12.5% last month, following the end of a tax break.
A temporary cut first introduced on 8 July 2020 saw the standard rate of VAT for struggling businesses in the hospitality and tourism sectors fall from 20% to 5%.
That short-term relief was in place until 30 September 2021, at which point the rate for businesses in these sectors increased to 12.5% until 31 March 2022.
Under the Treasury’s current plans, VAT on hospitality and tourism sector purchases will return to its pre-pandemic level of 20% on 1 April next year.
A coalition of the UK’s biggest hospitality and tourism bodies fear returning the VAT rate to 20% risks “derailing the recovery while businesses are still recovering”.
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