Hospitality Ulster Welcomes Call for 10% VAT Pilot in NI

Hospitality Ulster has welcomed a recommendation from the Northern Ireland Affairs Committee for a four-year pilot reducing VAT on food and accommodation in Northern Ireland to 10%, following sustained lobbying by the hospitality sector over the tax burden facing local businesses.

The Committee has written to the Chancellor of the Exchequer, John Healey MP ahead of next week’s Budget, recommending a reduction from the current 20% rate to help hospitality and tourism businesses manage rising operating costs and compete with businesses across the border.

Hospitality Ulster has consistently highlighted the impact of the VAT differential on Northern Ireland’s hospitality sector, including through its engagement with the Committee’s inquiry into the taxation of hospitality and tourism. The Committee’s recommendation follows evidence from industry representatives and visits to hospitality businesses in Northern Ireland, including the White Horse Hotel and The Park Bar in Derry/Londonderry.

Colin Neill, Chief Executive, Hospitality Ulster, said:

“We welcome the Northern Ireland Affairs Committee’s recommendation for a 10% VAT pilot on food and accommodation in Northern Ireland. This is an important recognition of the challenges facing our industry and reflects the sustained lobbying that Hospitality Ulster and our members have undertaken to make the case for change.

“We have been clear that Northern Ireland’s hospitality businesses are operating under significant cost pressures and facing a competitive disadvantage against businesses across the border. A reduction in VAT would provide welcome support for hotels, restaurants and food-led pubs, helping them to remain competitive, protect jobs, and invest in their businesses. For these reasons, we continue to support a 10% VAT rate for the whole UK hospitality industry.

“However, we must also recognise that a reduction in VAT on food and accommodation will not benefit every part of our sector. Pubs that do not serve food will see no direct benefit from this proposal, despite facing many of the same pressures from rising costs and business rates.

“If we are serious about protecting the long-term sustainability of Northern Ireland’s hospitality industry, we must see these VAT cuts extended to alcohol or the Executive must move to reform pubs' business rates. Pubs are at the heart of communities across Northern Ireland, supporting local jobs and providing important social spaces. Those that will not benefit from a VAT reduction must also receive meaningful support to ensure they can remain viable.

“We urge the Chancellor to act on the Committee’s recommendation ahead of the Budget, while calling on the Northern Ireland Executive to ensure that business rates do not continue to undermine the sustainability of pubs and other hospitality businesses.”