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Budget must reduce hospitality tax burden to create jobs

September 9, 2026

Rebalancing the hospitality tax burden will strengthen business viability, create jobs and help high streets.

UKHospitality has said the Budget on October 28 is a ‘moment for change’ where the new Government should move away from disproportionately taxing employment.

It said the Chancellor should rebalance the tax system to bring hospitality costs down, which will give businesses much-needed financial headroom, drive job creation and support high streets.

Hospitality is a growth engine that has been “pushed back into the pack” by decisions that have left hospitality with a disproportionate tax burden compared to other sectors.

Our proposed four measures to back hospitality growth

1
Cut VAT to 10% for hospitality, bringing the UK in line with Europe
2
Fix business rates for hospitality
3
Reduce employer NICs
4
Replace the holiday tax with a tourism bonus

Allen Simpson, Chief Executive, UKHospitality

Allen Simpson, Chief Executive of UKHospitality

“Hospitality has always been a sector proud of its ability to offer anyone an opportunity – young people, school leavers, non-graduates, and many more. It is one of the few sectors which creates job in every postcode.

“Government decisions in recent years have put that all at risk as hospitality’s tax burden has grown disproportionately to other sectors. Hospitality was a growth engine that has been pushed back into the pack. Costs up, opportunities curtailed, jobs lost and businesses closing their doors for good.

This Budget, under a new Prime Minister, is a moment for change. We have already seen promising signs from the new Government in its approach to hospitality and I hope that this Budget will see further backing for the entire hospitality sector.

“Hospitality is the solution to create jobs, help young people into work and drive growth in every postcode. Cut VAT, fix business rates, reduce employer NICs and replace the holiday tax. These are four clear solutions that can bring costs down and drive hospitality growth.”