Campaigners call for reduction in VAT to boost rural tourism

Ahead of next week’s spring budget, the CLA is calling for a permanent VAT reduction to boost rural tourism
Ahead of next week’s spring budget, the CLA is calling for a permanent VAT reduction to boost rural tourism

Rural campaigners are calling for a permanent reduction in VAT for accommodation and attractions enterprises to boost rural tourism.

The Country Land and Business Association (CLA) said the government must also stimulate capital investment in farm businesses and create a tax system that doesn't penalise farmers.

The body, which represents nearly 27,000 farmers, landowners and rural firms, submitted the asks to the Treasury as the lead-up to the spring budget on 6 March builds.

A permanent reduction in VAT to 12.5% for accommodation and attractions enterprises would help level up the rural economy, the campaigning group said.

The UK's current rate is far higher than in other European countries, including France (10%) and Spain (10%), which pay half the VAT that British firms do.

According to the CLA, slashing VAT would enable rural tourism firms to lower their prices to the public - leading to an increase in demand and more jobs being created.

Other asks include moves to support the decarbonisation of owner-occupied and rented homes by allowing more people to able to qualify for the zero-rate of VAT on energy-saving materials.

This could be done by extending relief to the purchase of energy-saving materials as well as their installation, the CLA said.

Responding to the asks, the group's president Victoria Vyvyan said farmers and landowners were 'well-placed' to help achieve 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," she explained.

"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.

“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.

“With VAT permanently at 12.5%, we estimate that over a 10-year period, the tourism sector would be able to stimulate an additional £2bn for the rural economy, generating extra revenue for the Treasury.”

The CLA also said that more certainty was needed for farmers and landowners wishing to deliver environment land management or ecosystem services by not subjecting it to inheritance tax.