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<p>The temporary reduced rate of VAT was introduced on 15 July 2020 to support the
cash flow and viability of around 150,000 businesses and protect over 2.4 million
jobs in the hospitality and tourism sectors. As announced at Spring Budget 2021, the
Government extended the 5 per cent temporary reduced rate of VAT for the tourism and
hospitality sectors until the end of September 2021. On 1 October 2021, a new reduced
rate of 12.5 per cent was introduced for these goods and services to help ease affected
businesses back to the standard rate. This new rate will end on 31 March 2022.</p><p>
</p><p>This relief has cost over £8 billion and, whilst all taxes are kept under review,
there are no plans to extend the 12.5 per cent reduced rate of VAT. The Government
has been clear that this relief is a temporary measure designed to support the sectors
that have been severely affected by COVID-19. It is appropriate that as restrictions
are lifted and demand for goods and services in these sectors increases, the temporary
tax reliefs are first reduced, and then removed, to rebuild and strengthen the public
finances.</p>
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