CLA calls for VAT cut to be made permanent

Returning to 20% rate will make rural tourism businesses 'uncompetitive'
Rishi Sunak with red budget briefcase.jpg

The Country Land and Business Association has called on the UK Government to extend the VAT cut on tourism and hospitality businesses beyond March 2022.

VAT currently stands at 12.5% for many rural tourism and hospitality businesses, but this rate is expected to return to the pre-pandemic rate of 20% in Spring.

Writing to the Chancellor of the Exchequer, CLA President Mark Tufnell said:

“Many of our members run tourism and hospitality businesses. The new COVID variant is causing continued uncertainty and low consumer confidence, and is having a devastating impact on forward bookings.”

Extending the reduction – or indeed making it permanent – will keep tourism businesses in the UK competitive with other European economies. The VAT rates for similar businesses in Spain and France, for example, stand at 10%.

The CLA believes the pandemic provides an opportunity to remind people of the joys of a holiday within the UK, and is encouraging the UK Government to be ambitious in making sure holiday-maker’s money is spent in the UK rather than rival economies.

New business support package announced for England

The CLA has also welcomed the Chancellor’s £1bn support package for businesses in England announced shortly before Christmas. The package is designed to support hospitality, leisure and tourism businesses in the wake of the Omicron variant of COVID-19.

The Welsh Government will bring forward measures for Welsh businesses in due course.

The announcement include:

  • Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises, plus more than £100 million discretionary funding will be made available for local authorities to support other businesses
  • Government will also cover the cost of Statutory Sick Pay for Covid-related absences for small and medium-sized employers across the UK
  • £30 million further funding will be made available through the Culture Recovery Fund, enabling more cultural organisations in England to apply for support during the winter

Local Authorities will have discretion to allocate this funding to businesses most in need.

The UK Government has published a series of fact sheets to help business owners understand and apply for support. Find them on the Government’s website here.