Constituents have contacted me about VAT and the hospitality sector.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services, helping to fund key spending priorities, including important public services like the NHS, education and defence.

During the COVID-19 pandemic, the Government introduced a reduced VAT rate for the hospitality sector as a temporary support measure. It was appropriate that as restrictions were lifted and demand for goods and services in these sectors increased, the temporary tax reliefs were first reduced and then removed to rebuild and strengthen the public finances. I understand HM Treasury is not currently planning to reduce the rate for VAT in the hospitality sector, and the VAT threshold will be maintained at its current level until 31 March 2026. At £85,000, the UK has a higher VAT registration threshold than any EU Member State and the second highest in the Organisation for Economic Co-operation and Development. This keeps the majority of UK businesses out of VAT altogether.

The Government has announced a business rates support package worth £4.3 billion over five years to support small businesses and the high street. The small business multiplier will be frozen for a fourth consecutive year, and Retail, Hospitality and Leisure relief will be extended, ensuring the most vulnerable businesses continue to be supported. A third of properties in England have already been taken out of rates completely through Small Business Rates Relief, and the Government has also frozen the tax rate for the last three years.