‘No plans’ to extend business VAT cut despite hospitality warnings

The government currently has “no plans” to extend the VAT cut for hospitality, tourism and leisure businesses, despite industry calls for the tax break to continue while coronavirus restrictions are still in place.

The Chancellor Rishi Sunak last year reduced VAT for hospitality from 20 per cent to five per cent as part of emergency measures to support economic recovery throughout and after the Covid-19 pandemic.

The tax cut, which was welcomed with open arms by pub and restaurant bosses, is due to end on March 31.

Industry lobby groups have urged the Chancellor to extend the move to give businesses a stronger chance of survival.

But Treasury minister Jake Norman said this week the government has “no plans” to extend the cut to VAT for the hospitality sector, even though it may not reopen until spring.

“The relief comes at a significant cost, and while the government keeps taxes under review, it has no current plans to extend it further,” Norman told MPs.

Pub and restaurant industry bodies have said previous that it is “essential” for the sector’s recovery that the VAT cut continues, as well as an extension to the business rates holiday.

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