Ann McGauran 03 March 2021

Budget 2021: Sunak freezes VAT rate to support hospitality and tourism

Budget 2021: Sunak freezes VAT rate to support hospitality and tourism image

Support for hospitality and tourism businesses was underpinned in the Budget by a freezing of the current 5% rate of VAT for another six months until the end of September.

Chancellor Rishi Sunak said from that point, VAT ‘will not go straight back to the 20% rate, we will have an interim rate of 12.5% for another six months, not returning to the standard rate until April of next year’.

The Government is cutting VAT next year by almost £5bn in total, he added.

The chancellor also announced hospitality and leisure businesses will get grants of up to £18,000 to support reopening. To further support the hospitality sector, planned increases in alcohol duties will be cancelled for the second year in a row.

Mr Sunak said the Treasury and the culture secretary Oliver Dowden will make £700m available to support what he called the UK’s ‘incredible’ arts, culture and sporting institutions as they reopen. This would include aid for the UK and Ireland’s joint 2030 World Cup bid, support a new approach to apprenticeships in the creative industries, and extend the £500m Film and Television Production Restart Scheme to cover losses due to coronavirus.

The chancellor also announced the creation of a £150m fund to help communities across the UK take ownership of pubs, theatres, shops or local sports club at risk of being lost to local communities due to the pandemic – ‘putting more power in the hands of local people’.

Mr Sunak also pledged a well-trailed further £1.65bn to deliver the Government’s goal to give every adult a first dose of the vaccine by the end of July.

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