Spring Budget: Calls for boost to rural tourism

Ahead of next week’s spring budget, the Country Land and Business Association (CLA) is calling for a permanent reduction in VAT for accommodation and attractions enterprises to boost rural tourism.

aerial view of farm

The CLA has submitted a series of recommendations to the Treasury to be considered in the decision-making process in the lead-up to the Spring Budget next week (6th March).

Key recommendations to help level up the rural economy and deliver the government’s net zero objectives include:

  • To support the rural tourism sector, there needs to be a permanent reduction in VAT to 12.5% for accommodation and attractions enterprises
  • To support the decarbonisation of owner-occupied and rented homes, 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
  • Simplify the tax system and encourage investment in agricultural buildings, equipment, and infrastructure which will ultimately modernise the sector and drive productivity growth. This means, in particular: extending the full expensing regime to unincorporated businesses; and extending the annual investment allowance and the writing down allowances to include buildings and structures
  • Provide certainty for landowners wishing to deliver environment land management or ecosystem services by confirming at the Budget that it will 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 to give confidence to those planning the reorganisation of substantial but illiquid capital assets, given land is a significant input to their businesses.

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.

“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.

“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.”

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