The Country Land and Business Association (CLA) is calling for a permanent reduction in VAT for accommodation and attractions enterprises to boost rural tourism ahead of the spring budget.
Chancellor of the Exchequer Jeremy Hunt will present his spring budget to parliament on Wednesday, March 6, 2024.
The CLA recently submitted written representations to the Treasury to be considered as part of the spring budget decision-making process.
One recommendation is a permanent reduction in VAT to 12.5% for accommodation and attractions enterprises.
As well as this, the CLA has said more people should be able to qualify for the zero-rate of VAT on energy-saving materials.
This can be done by extending relief to the purchase of energy-saving materials as well as their installation, the CLA said.
Other recommendations are:
- Simplify the tax system and encourage investment in agricultural buildings, equipment, and infrastructure;
- Proceed with legislation to ensure that land used for environmental delivery/ecosystem services is not subject to inheritance tax;
- Keep the framework of capital taxes stable.
CLA president Victoria Vyvyan said: “The CLA and its members are well-placed to help Government achieve its ambitions to deliver growth and create a fairer and greener country.
“To enable growth in the rural economy, the government needs to fund the agricultural transition so that we can grow food and enhance the environment.
“They also need to stimulate capital investment in agricultural businesses and create a tax system that doesn’t penalise farmers and land managers for providing environmental land management and eco-system services.”
Vyvyan said rural tourism is an important and exciting sector, accounting for over 70% of domestic tourism, but VAT rates need to be internationally competitive to help it reach its full potential.
“France and Spain pay half the VAT we do and that undermines our competitiveness,” she said.
“With VAT permanently at 12.5%, we estimate that over a 10-year period, the tourism sector would be able to stimulate an additional £2 billion for the rural economy, generating extra revenue for the Treasury.”
