Calls for further extension of reduced VAT rate to avoid 310,000 job losses

An estimated 310,000 jobs in hospitality and tourism could be lost if the Chancellor does not extend the VAT cut in his March Budget, according to new findings from the Cut Tourism VAT (CTV) Campaign.

A survey by the CTV Campaign – alongside UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions – suggested that beyond March, turnover in the tourism and hospitality sector would be £9bn greater with VAT at 5% compared to 20%.

Last September, Rishi Sunak extended his temporary reduction of VAT rates from 20% to 5% in the hospitality and tourism sector until 31 March 2021.

However, the CTV Campaign’s findings, based on responses from 1,144 businesses in tourism and hospitality, indicated that a decision to return VAT to 20% from April could fail to protect employment and the survival of those businesses.

The survey revealed that 90% of firms said the VAT cut – first announced by Sunak last July – was “important”, “very important” or “crucial” to their businesses, while over 75% said that they might not have been able to continue trading without it.

The CTV Campaign suggested that most businesses used some of the VAT reduction to meet the additional costs of COVID-19 compliance and the next most important use was to pay wages and suppliers.

CTV Campaign chairman, Graham Wason, commented: “The results of this survey show not only that reduced VAT has been crucial to the survival of hundreds of tourism and hospitality businesses, but also that what is vitally needed now is the announcement of a continued reduction to boost investment, jobs and the wider UK economy.”

UKHospitality CEO, Kate Nicholls, added: “The decision of the Chancellor to cut VAT to 5% last July was one of the few bright spots of the year and stimulated economic growth before the second wave began to hit.

“If the government wants to see a turbo-charged recovery in communities right across the UK then an extension of the VAT cut is the surest way to do it – creating jobs, investment in our high streets and helping customers get a cheaper hospitality experience.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


NEW BUILD IN FOCUS - NEW EPISODE OF THE MORTGAGE INSIDER PODCAST, OUT NOW
Figures from the National House-Building Council saw Q1 2025 register a 36% increase in new homes built across the UK compared with the same period last year, representing a striking development for the first-time buyer market. But with the higher cost of building, ongoing planning challenges and new and changing regulations, how sustainable is this growth? And what does it mean for brokers?

The role of the bridging market and technology usage in the industry
Content editor, Dan McGrath, sat down with chief operating officer at Black & White Bridging, Damien Druce, and head of development finance at Empire Global Finance, Pete Williams, to explore the role of the bridging sector, the role of AI across the industry and how the property market has fared in the Labour Government’s first year in office.


Does the North-South divide still exist in the UK housing market?
What do the most expensive parts of the country reveal about shifting demand? And why is the Manchester housing market now outperforming many southern counterparts?



In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.

The new episode of The Mortgage Insider podcast, out now
Regional housing markets now matter more than ever. While London and the Southeast still tend to dominate the headlines from a house price and affordability perspective, much of the growth in rental yields and buyer demand is coming from other parts of the UK.

In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.