Economy · Budget & tax · 9 November 2026
House of Commons Library outlines history of tourism VAT relief
House of Commons Library has published an overview of the temporary VAT rates applied to the tourism sector since 2020. The document notes that ministers have consistently opposed making the reduced rate permanent due to cost concerns.
House of Commons Library has published a summary of the history of VAT relief for the tourism sector in the UK. The text outlines the legislative background and the government's response to industry campaigns for lower rates. It notes that EU VAT law previously limited the UK's ability to set lower VAT rates on specific tourism services, a restriction removed by the UK leaving the EU.
A temporary 5% VAT rate was introduced on 15 July 2020 to support job creation during the pandemic. This rate applied until 12 January 2021, was extended until 30 September 2021, and was then replaced by a 12.5% rate until 31 March 2022. The estimated total cost of this relief was £8 billion. Lucy Frazer, then Financial Secretary to the Treasury, stated in April 2022: "it is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced, and then removed, in order to rebuild and strengthen the public finances."
Ministers have opposed making the reduced VAT rate permanent, citing cost concerns. The government views requests for VAT relief in the context of over £50 billion of requests received since the EU referendum. The relief ended in March 2022, and the standard rate of VAT applies to tourism services from that point forward.
Written by StreetOwl from House of Commons Library’s own announcement. It was drafted by StreetOwl’s own model, every figure and quotation was checked by code against the announcement, and it was read and approved by Michael Rossi before it went up. It says what was announced, not what anyone should do about it.
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