VATs Enough: Raising taxes now would break Britain’s hospitality industry and damage communities across the UK
HospitalityUK said it best in 2021, #VATsenough. The hospitality industry can only watch with gritted teeth as politicians debate new tax policy, and by extension their future.
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Hospitality has already suffered years of Brexit and COVID related turmoil. The last budget simply compounded stresses, with minimum wage increases and rises in national insurance and business rates. Today, margins are wafer-thin, costs are at record highs, and operators are still scrambling to build growth.
In the first half of the year hospitality businesses shuttered at a rate of 2 per day. The sector isn’t resilient enough to absorb the fiscal blow that VAT rises would introduce, without impacting jobs, prices and high streets across the country. A sharp return to 20% VAT would be devastating.
This isn’t a luxury industry. As one of the largest private-sector employers, hospitality is the beating heart of Britain's economy and communities. Frustratingly, we’ve also seen what tax relief can achieve. Cutting VAT to 5% during the pandemic gave businesses vital breathing space.
Extending it to 12.5% allowed many to stabilise. A full return to a 20% rate will mean impossible choices: hike prices for consumers already struggling with the cost of living, slash jobs and wages, or in some cases shut the doors for good.
Hospitality is also one of the largest employers of young people in the UK. The government's flagship announcement, a youth jobs guarantee, is likely to rely on the hospitality sector. Its success is tied to having a proper growth agenda. Can they create an environment that allows businesses to retain employees once the placement ends. With rising costs and squeezed margins, many operators don’t have the headroom.
In conversations with customers, at Harri we are sensing rising anxiety. Food and labour costs are eating away at profitability. Smaller independents are even more exposed. For them, VAT could be the difference between survival and closure. And when businesses go under, it’s not just owners who suffer. Communities lose jobs, customers lose choice, and high streets lose vibrancy.
There is a human cost too. If VAT rises, consumers pay more, which means fewer visits, less spending, and weaker local economies. If businesses swallow the cost, it kills reinvestment and innovation. Either way, everyone loses.
If politicians are serious about levelling up and supporting working people, they must recognise that hospitality is central to that mission. To raise VAT now would be a self-inflicted wound on one of the UK’s most vital industries.
VATs Enough. It’s time to stop squeezing hospitality and start backing its recovery.
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Dan Maimone is Head of Global Customer Experience at Harri, a leading Hospitality workforce management tech provider
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