I welcome my near constituency neighbours to their posts. I hope they will get behind a brilliant public transport scheme that Cambridge craves and the country needs Cambridge to have. There are 16,000 private hire operators across the country and an impending court case could change the complicated relationship between customer and operator. The worry is that if that change comes into effect, as a consequence of the court case, many small operators could be at risk. What plans does the Department have to deal with that contingency? Will the Minister agree to meet me and representatives of the industry to discuss that further?

Whether she has had recent discussions with Cabinet colleagues on the potential impact of VAT levels on private hire operators.

I know the hon. Gentleman is a keen champion for this area, given that he is chair of the all-party parliamentary group on taxis. He will know that the question of whether a private hire vehicle operator needs to pay VAT depends on two factors: whether he is acting as principal or as agent; and whether he meets the VAT threshold. As he will also know, His Majesty’s Revenue and Customs is responsible for VAT.

The Government keeps all taxes under constant review.

Under the current VAT rules, sun protection products are subject to the standard rate of VAT. High-factor sunscreen is on the NHS prescription list for certain conditions and therefore is provided VAT free when dispensed by a pharmacist.

More widely, the Government’s approach to this matter is to support safety campaigns that ensure that sunscreen is placed within its proper context; as one of the precautions that people can take against the harmful rays of the sun, but one that does not provide 100 per cent protection. Advice from leading cancer charities recommends a range of steps people can take for protection, which includes avoiding long periods of exposure, staying in the shade at peak hours, and protecting themselves with a hat and sunglasses.

The Government keeps all taxes under constant review.

Under the current VAT rules, sun protection products are subject to the standard rate of VAT. High-factor sunscreen is on the NHS prescription list for certain conditions and therefore is provided VAT free when dispensed by a pharmacist.

More widely, the Government’s approach to this matter is to support safety campaigns that ensure that sunscreen is placed within its proper context; as one of the precautions that people can take against the harmful rays of the sun, but one that does not provide 100 per cent protection. Advice from leading cancer charities recommends a range of steps people can take for protection, which includes avoiding long periods of exposure, staying in the shade at peak hours, and protecting themselves with a hat and sunglasses.

The Government keeps all taxes under constant review.

Under the current VAT rules, sun protection products are subject to the standard rate of VAT. High-factor sunscreen is on the NHS prescription list for certain conditions and therefore is provided VAT free when dispensed by a pharmacist.

More widely, the Government’s approach to this matter is to support safety campaigns that ensure that sunscreen is placed within its proper context; as one of the precautions that people can take against the harmful rays of the sun, but one that does not provide 100 per cent protection. Advice from leading cancer charities recommends a range of steps people can take for protection, which includes avoiding long periods of exposure, staying in the shade at peak hours, and protecting themselves with a hat and sunglasses.

The UK has the highest VAT registration threshold in the OECD and as compared to EU Member States at £85,000. This keeps the majority of UK businesses out of VAT altogether.

Whilst the Government keeps all taxes under review, it was announced at Budget 2021 that the VAT threshold will be maintained at its current level of £85,000 until 31 March 2024.

VAT has been designed as a broad-based tax on consumption, and the twenty per cent standard rate applies to the vast majority of goods and services, including the sale of new bicycles.

According to OBR forecasts, VAT will have raised approximately £135 billion in 2021-22, helping to fund key spending priorities. Any reduction in tax paid is a reduction in the money available to support important public services.

The Government keeps all taxes under review.

The hospitality sector broadly equates to the Sector Industrial Classification of ‘Accommodation and Food Service Activities’ which is divided between two subsectors: accommodation, and food and beverage service activities.

The following is the Net VAT declared across these two subsectors for the three most recent years of published data found in the HMRC’s publication, VAT annual statistics:

All figures are in £ millions.

These declarations data reflect the net liabilities from VAT returns (rather than actual payments made) and are not impacted by the VAT deferral scheme which allowed businesses to defer their VAT between 20 March and 30 June 2020.

The negative figure for the Accommodation subsector in 2020-21 reflects that that this subsector was in a net repayment position this year, whereby VAT Repayments exceeded VAT Payments. This was mainly due to the reduced 5 per cent VAT rate that was introduced on 15 July 2020.

Many supplies of education, including those provided by eligible independent schools, are exempt from VAT. This means that no VAT is charged to the final consumer, and that the schools cannot recover VAT they incur on their costs.

The Government keeps all taxes under review, and any future changes to the UK tax system will be costed in the usual way.

The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors. This relief ended on the 31 March 2022.

The Government has been clear that the reduced rate of VAT for hospitality and tourism was a temporary measure designed to support the sectors that have been severely affected by COVID-19. It was appropriate that, as restrictions were lifted, and demand for goods and services in these sectors increased, the temporary tax reliefs were first reduced, and then removed, in order to rebuild and strengthen the public finances. While we keep all taxes under review, there are no plans to reintroduce a reduced rate of VAT from tourism and hospitality.

Unique circumstances globally, including the war in Ukraine, have pushed pump prices up to unprecedented levels. In response to fuel prices reaching their highest ever levels, the Government announced at Spring Statement 2022 a temporary 12-month cut to duty on petrol and diesel of 5p per litre across the UK. This cut represents savings for households and businesses worth around £2.4 billion in 2022-23.

VAT has been designed as a broad-based tax on consumption, and the twenty per cent standard rate applies to the vast majority of goods and services. While there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations. VAT makes a significant contribution to the public finances and, according to OBR forecasts, will have raised approximately £135 billion in 2021/22. As you will know, any reduction in tax paid is a reduction in the money available to support important public services, including the NHS and policing.

In response to fuel prices reaching their highest ever levels, the Government announced at Spring Statement 2022 a temporary 12-month cut to duty on petrol and diesel of 5p per litre across the UK. This cut represents savings for households and businesses worth around £2.4 billion in 2022-23.

VAT has been designed as a broad-based tax on consumption and the twenty per cent standard rate applies to the vast majority of goods and services, including VAT on road fuel. Whilst there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations.

A key principle of the VAT system is that similar supplies are subject to similar levels of VAT. The Government keeps all taxes under constant review, but there are no plans to offer VAT rebates on fuel for key workers.

What recent discussions he has had with (a) Cabinet colleagues and (b) stakeholders on the potential merits of zero-rating VAT on domestic fuel.

VAT on domestic fuel continues to be levied on rising fuel bills while one in three Scots households live in fuel poverty. With 8% of the UK population, Scotland has 96% of the UK’s crude oil reserves, 63% of the UK’s natural gas reserves, 90% of the UK’s hydropower and 25% of Europe’s offshore wind and tidal resources. Scotland’s vast energy potential far exceeds the needs of our people yet we receive no revenue. Can the Minister tell me the true value of Scotland’s energy to the UK Treasury, and set out how the Government will service their massive debts when they can no longer fleece Scotland of its energy resources following a vote for independence in 2023?

The original question was about heating fuel, and I wonder if the Minister could let us know the proportion of people in London who use heating oil compared with those out in rural areas such as Lincolnshire or even in Scotland?

T8

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Mr Gagan Mohindra (South West Hertfordshire) (Con):

Yesterday morning, I had the pleasure of hosting a roundtable discussion with farmers from my constituency in collaboration with the National Farmers Union. My constituent Andy Cornthwaite informed me that he was struggling to employ extra staff to grow his business due to the current £85,000 VAT threshold. I am aware that my right hon. and learned Friend recently responded to a written question from my hon. Friend the Member for North West Durham (Mr Holden) on the subject, but will she consider an early review of the VAT threshold due to the increase in labour and/or materials costs for small and medium-sized enterprises?

The hon. Member’s question is about the Government’s support for those who are struggling with the cost of living. The Government recently announced an additional £15 billion-worth of additional support, targeted particularly on those with the greatest need. Government support for the cost of living now totals £37 billion this year.

The information requested is not available. HMRC does not hold information on VAT revenue from specific products or services. Businesses are not required to provide figures at a product level on their VAT returns, as this would impose an excessive administrative burden.

The Government recognises that accounting for VAT can be a burden on small businesses. This is why the UK maintains the highest VAT registration threshold in the OECD and as compared to EU Member States at £85,000. This keeps the majority of UK businesses out of VAT altogether.

Views on the VAT registration threshold are divided and the case for change has been regularly reviewed over the years. While some businesses have argued that a higher threshold would reduce administrative and financial burdens, others contend that a lower threshold would provide a fairer competitive environment.

Whilst the Government keeps all taxes under review, it was announced at Budget 2021 that the VAT threshold will be maintained at its current level of £85,000 until 31 March 2024.