Press release

Second helpings of VAT rate cut aims to serve up recovery for hospitality and tourism businesses

3 March 2021

Gareth Pritchard, indirect tax partner at Deloitte, comments on the Chancellor’s statement:

“The extension of the VAT rate cut will provide peace of mind to many hospitality, holiday accommodation and tourist attraction owners. These have been some of the sectors hit hardest by the COVID-19 pandemic.

“The temporary 5% VAT rate will continue to apply until 30 September 2021, and a new reduced VAT rate of 12.5% will be introduced for the following six months until 31 March 2022, so that a cliff-edge return to the standard rate of 20% is avoided.

“While the cut will be welcomed by many, pubs and bars may be disappointed that it has not been extended to the sale of alcoholic drinks. Navigating the shift between three different rates of VAT over a 12-month period may also be a burden, as businesses will need to ensure they deal with the necessary compliance and system adjustments to avoid falling behind.

“As the hospitality industry continues work hard to recover from the impact of the pandemic, it’s likely that many will choose to put the money saved from a VAT rate cut back into their businesses. However, those that choose to pass on some or all of the benefit in their pricing to consumers could further fuel demand in these sectors once lockdown measures ease.

“Either way, the rate cuts are well poised to boost cash flow, margins and employment opportunities across these integral segments of the UK economy.”



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 Deloitte spokespeople


Deloitte has a range of spokespeople available to comment on today’s statement. They can be reached on 020 7007 3333 or 0207 303 5054 or one of the following numbers: 

• Ian Stewart – chief economist (07789 036 944)

• Amanda Tickel - head of tax policy (07920 270 964)

• Rachel McEleney - personal tax (07826 891 752)

• Zubin Patel – corporate tax (07795 968 483)

• James Warwick - employment tax (07768 178 264)

• Gareth Pritchard – indirect tax (07920 006 216)

• Mike Barber – climate change/sustainability (07920 270 964)

• Jonathan Evans – stamp duty (07818 535 803 /07789 036 944)

• Gerry Biddle – business rates (07785 381 369)

About Deloitte

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Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.


The information contained in this press release is correct at the time of going to press.

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