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<p>In order to support the cash flow and viability of around 150,000 businesses and
to protect over 2.4 million jobs, the Government has applied a temporary reduced rate
of VAT (5 per cent) to goods and services supplied by the tourism and hospitality
sectors, which will now end on 30 September 2021. On 1 October 2021, a new reduced
rate of 12.5 per cent will be introduced for these goods and services to help affected
businesses manage the transition back to the standard rate. The new rate will end
on 31 March 2022.</p><p> </p><p>The Government has been clear that the reduced rate
of VAT is a temporary measure. It is right that, as restrictions are lifted and demand
for goods and services in the tourism and hospitality sectors increases, this relief
is reduced and eventually removed in order to rebuild and strengthen the public finances.
This policy will cost the Exchequer over £7 billion and, while the Government keeps
all taxes under review, there are no plans to make the reduced rate of VAT permanent.</p><p>
</p><p>VAT raised around £130 billion in 2019/20 and helps to fund key spending priorities.
Any reduction in tax paid is a reduction in the money available to support important
public services, including the NHS and policing. While all taxes are kept under review,
any decision to grant new permanent VAT reliefs would have to be balanced by a reduction
in public spending, increased borrowing or increased taxation elsewhere.</p>
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