Hundreds of hospitality businesses urge the PM to lower VAT

A coalition of more than 800 hospitality businesses have written an open letter to prime minister Andy Burnham, urging him to set a lower rate of hospitality VAT.

Signatories included chefs Angela Hartnett, Clare Smyth, Heston Blumenthal and Jason Atherton, as well as larger chains from across the industry, such as Marriott International, Big Table Group and Loungers.

Fuller’s, Greene King, Marston’s, Mitchells & Butlers, Franco Manca, JKS, PizzaExpress, Best Western Hotels, Butlin’s and PPHE Hotel Group are also among the signatories, which are predominantly formed of small and medium-sized businesses.

The letter calls on Burnham to act on the comments he made in February as mayor of Greater Manchester, when he said he would argue for a hospitality VAT rate in line with Europe.

More than 370,000 people have signed the #VATsTheProblem petition calling for a 10% rate of VAT for hospitality, spearheaded by chef Tom Kerridge.

The letter stated: “It’s time for a fairer tax burden for hospitality. Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.

“We trust we can count on your support, following your comments in February this year that you would ‘argue for a VAT rate more consistent with what you find in Europe because of the social value that your businesses bring to places and towns’.

“Alongside your policy to reform business rates for the high street, we urge you to bring forward your plans to deliver a lower rate of VAT for hospitality.”

Kerridge added: “It’s clear that the prime minister understands the importance of hospitality, and I was really encouraged to hear him make the case earlier this year for a lower rate of VAT for our sector.

“The reality is that 20% VAT is holding hospitality back. Hospitality is different from many other businesses because so much of what we spend our money on is our teams. You can reclaim VAT on a product, but you can’t reclaim VAT on a person. That makes a 20% rate particularly tough for a sector where labour is one of our biggest costs.

“And this is all happening at a time when businesses are already dealing with rising wages, energy bills, food costs and business rates. We’re seeing the consequences, with businesses closing their doors every single week.

“We don’t need another promise. We need action.”

The open letter comes just days after government confirmed that mayors in England will be given new powers to implement a ‘tourist tax’.

In July, Burnham announced he would cut business rates by 20% for pubs, clubs and live music venues from April 2027.