Scottish businesses call for lower VAT

By Jo Gilbert

Published: 27 August, 2024

"Less spend, fewer visits and less time spent in venues" is the current reality for the Scottish hospitality sector as businesses face a double whammy of consumer reluctance and rising costs.

This summary comes direct from the latest Scottish Licensed Trade Association (SLTA) survey which reveals that hospitality outlets continue to meet with a challenging economic environment.

A reduction in visits to hospitality venues is at the heart of the problem.

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According to Colin Wilkinson, MD of SLTA, “for 62% of outlets, trading is down versus last year, despite the uplift from Euro 2024. Visitors are more selective on when they visit, with 19% leaving earlier and 16% only visiting our pubs and bars for events. Our report identifies that 64% of respondents highlighted less spend, fewer visits and less time spent in the venue.”

The summer survey represents just over 400 pubs, bars, restaurants and hotels, covering the spectrum of licensed hospitality businesses in Scotland.

According to the results, 78% of outlets are now looking to the new UK government to reduce VAT to help address the issues. The SLTA is now adding to this call.

“In our January 2024 survey, we highlighted that 96% of our respondents agreed with the statement ‘The Scottish government is out of touch with the business community’.

“With recent changes at Westminster, we call on the Scottish and UK governments to work to support one of our key industries. The most effective way to achieve this is by reducing VAT in the licensed hospitality sector and an urgent review on the commercial rating system,” Wilkinson added.

Other takeaways from the survey highlight the struggle now faced by many businesses in Scotland.

Rising business rates continues to be a challenge across the sector with 42% of outlets seeing an increase of 10% or more. Rising costs are also increasingly a challenge: 77% of venues are seeing 10%+ increases, versus 30% of venues in the January survey.

Meanwhile, 58% of outlets expect to see decline for the remainder of 2024, with 44% expecting decline of over 10%.

The majority of outlets think the best way the new UK government can help hospitality is by reducing VAT – a view shared by many south of the border too.

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