UK public support maintaining 12.5% VAT, UKH says

There is strong support amongst the public for VAT to remain at its current rate of 12.5% beyond April, according to a new study by YouGov commissioned by UKHospitality.

Excluding those who didn’t give a view, only 21% believed the Government should stick with its current plan to increase VAT in April for hospitality, with 49% of respondents wanting the reduced rate to be retained long-term. Some 30% wanted an extension to the reduced rate.

The same research found that the public also believes that the Government has a “central role to play” in the economic recovery of the hospitality sector.

The representative study of 1,743 UK adults also revealed the extent of the cost crunch, with 92% of respondents saying their cost of living has gone up since before the pandemic. Two thirds of those adults (67%) said they are cutting back on meals out as a result.

According to UKH, keeping the VAT level at its current rate would help restrain “rampant” inflation, which is expected to peak at over 7% in the Spring. It added that an increase in VAT will only further fuel inflation across the nation.

UKHospitality CEO Kate Nicholls said: “After two extremely challenging years and, with the unfolding cost-of-living crisis, there is now a very strong case for the Government to use the next Budget to deliver the vital support that these surviving and indebted businesses need, to protect jobs and defend the current fragile recovery.

“Holding VAT at 12.5% will provide vital support for thousands of small, local, community businesses. It will protect jobs at a pivotal moment for the recovery. This research shows that our guests are feeling the pinch and that is hugely concerning for an industry and its workforce that are reliant on discretionary spending.” 

She added: “Extending the existing VAT rate of 12.5% will help hospitality operators to hold down their prices, secure jobs and will help keep a lid on inflation.”