UKH calls on govt to cut VAT for hospitality to improve tourism

The long campaign to reprice UK tourism

The argument that UK tourism is structurally overtaxed has resurfaced at each point of political or economic rupture over the past decade. In the immediate aftermath of the EU referendum, ministers floated the prospect that Brexit could enable the abolition of VAT on accommodation and attractions, framing tax autonomy as a competitive weapon. That early optimism hardened into a more pragmatic demand during the pandemic, when the temporary reduction of hospitality VAT to 5% won cross-party backing and was widely interpreted as evidence that fiscal intervention could stimulate demand while protecting employment. Across both episodes, the underlying complaint remained constant: a 20% rate that sits above many European peers and, in the view of operators, suppresses inbound competitiveness.

UKHospitality’s latest appeal for a cut, set against figures showing recovery still shy of pre-pandemic levels, therefore reads less as a fresh initiative than as the continuation of a long-running policy campaign. The sector’s case – that reduced VAT would help reposition Britain as a value-driven destination – sits alongside the wider post-Covid emphasis on public and private sector collaboration to revive international travel, a theme that has framed recovery debates since global leaders first reconvened in person. Precedent suggests that whenever growth stalls or cost pressures intensify, hospitality taxation becomes the Treasury battleground of choice, the industry returning to VAT reform as the most direct lever through which demand, margin and international standing might be recalibrated.