Addressing physical inactivity and getting people moving more is important for improving people’s health, reducing demand on the National Health Service, and supporting economic growth.

The leisure and fitness sector play an important role in supporting the Government’s sickness to prevention shift through providing affordable and accessible opportunities for people to increase their activity levels.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £180 billion in 2025/26.

Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

One of the key considerations when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers. Evidence suggests that businesses often only partially pass on any savings from lower VAT rates.

His Majesty’s Treasury published a tax information and impact note on applying VAT to independent school fees, which is available at: https://www.gov.uk/government/publications/vat-on-private-school-fees/applying-vat-to-private-school-fees#who-is-likely-to-be-affected.

Addressing physical inactivity and getting people moving more is important for improving health outcomes, reducing demand on the National Health Service, and supporting economic growth.

The leisure and fitness sector play an important role in supporting the Government’s sickness to prevention shift through providing affordable and accessible opportunities for people to increase their activity levels.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26.

Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

One of the key considerations when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers. Evidence suggests that businesses only partially pass on any savings from lower VAT rates. In some cases, reliefs do not represent good value for money, as there is no guarantee that savings will be passed on to consumers.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services.

One of the key considerations when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers. Evidence suggests that businesses only partially pass on any savings from lower VAT rates. In some cases, reliefs do not represent good value for money, as there is no guarantee that savings will be passed on to consumers.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £180 billion in 2025/26. Exceptions to the standard rate have always been limited and balanced against affordability considerations. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.

The Government keeps all taxes and reliefs under review.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £180 billion in 2025/26. Exceptions to the standard rate have always been limited and balanced against affordability considerations. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.

The Government keeps all taxes and reliefs under review.

Supplies of welfare services, including the provision of care for people with permanent disabilities and dementia, are exempt from VAT if they are supplied by eligible bodies, such as public bodies or charities.

Because community interest companies (CICs) are not charities in law, they must meet the criteria of being state-regulated in order to provide VAT-exempt care services. This is to ensure that the VAT relief is carefully targeted at private providers offering safe and high-quality welfare services.

The Government recognises that there are private organisations that bring value to the care sector without being regulated, but extending the VAT relief to include these would have to be carefully balanced against the risks that it poses

More generally, VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £180 billion in 2025/26. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

Residential renovations are subject to a reduced rate of VAT of five per cent if they meet certain conditions. These include conversions of buildings from one residential use to another, conversions from commercial to residential use, and the renovation of properties that have been empty for two or more years.

The Chancellor makes decisions on tax policy at fiscal events in the context of the overall public finances.

The Government recognises the significant contribution made by retail and hospitality businesses to economic growth and social life in the UK.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.

HMRC estimates that the cost of reducing the 20 per cent Standard Rate of VAT on all accommodation and food and beverage services would be as follows in 2026-27: (a) to 15%: £5 billion, (b) to 12.5%: £8 billion (c) to 10%: £10.5 billion, (d) to 5%: £17 billion, (e) to 0%: £23.5 billion. Including retail would add to that significant cost.

At Budget 2025 the government announced reforms to the Motability scheme which will save over £1 billion over the next five years.

The VAT relief for top-up payments made to lease more expensive vehicles will be removed for new leases from July 2026, and Insurance Premium Tax will apply at the standard rate to insurance contracts on the Scheme. The VAT reliefs on weekly lease costs and vehicle resale will remain in place, and the tax changes will not apply to vehicles designed, or substantially and permanently adapted, for wheelchair or stretcher users.

These tax changes ensure Motability can continue to deliver for its customers, for example through the continued provision of a broad range of vehicle models available without any top-up payments. Further detail on the impacts of tax changes can be found in the Tax Impact and Information Note on GOV.UK Motability Scheme: reforming tax reliefs - GOV.UK.

The government has no plans to remove the VAT relief for vehicles designed for, or substantially and permanently adapted for, wheelchair or stretcher users.

At Budget 2025 the government announced tax changes to the Motability scheme. These changes will only impact new leases, and VAT reliefs within the scheme for weekly lease costs and vehicle resale will remain in place.

The government recognises the importance of engaging with tax payers on the development of tax policy, however, as set out in the tax policy making principles, the need to deliver change quickly means a consultation is not always practicable. Prior to announcing tax changes to the Motability Scheme at Budget 2025, the government instead engaged closely with the Motability Foundation to understand in depth how tax changes would impact the Motability Scheme and their customers. There are no plans for further consultation on the measure.

The package of reforms to the Motability Scheme announced as part of the Budget will ensure the Scheme delivers fairness for the taxpayer, while continuing to support disabled people. The Scheme will continue to offer a choice of affordable vehicles to meet a range of accessibility needs and offer vehicles which require no advance payment, meaning that people will be able to access a suitable vehicle using only their qualifying disability benefit. Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms.

Existing leases and vehicles substantially designed for, or adapted for, wheelchair or stretcher users will continue to benefit from VAT reliefs on advance payments and the IPT exemption, in recognition of the additional costs associated with these vehicles.

Motability Foundation, the independent charity with responsibility for overseeing the Scheme, will continue to offer means-tested grants to support eligible people who would otherwise struggle to afford the advance payment.

The package of reforms to the Motability Scheme announced as part of the Budget will ensure the Scheme delivers fairness for the taxpayer, while continuing to support disabled people. The Scheme will continue to offer a choice of affordable vehicles to meet a range of accessibility needs and offer vehicles which require no advance payment, meaning that people will be able to access a suitable vehicle using only their qualifying disability benefit. Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms.

Existing leases and vehicles substantially designed for, or adapted for, wheelchair or stretcher users will continue to benefit from VAT reliefs on advance payments and the IPT exemption, in recognition of the additional costs associated with these vehicles.

Motability Foundation, the independent charity with responsibility for overseeing the Scheme, will continue to offer means-tested grants to support eligible people who would otherwise struggle to afford the advance payment.

The package of reforms to the Motability Scheme announced as part of the Budget will ensure the Scheme delivers fairness for the taxpayer, while continuing to support disabled people. The Scheme will continue to offer a choice of affordable vehicles to meet a range of accessibility needs and offer vehicles which require no advance payment, meaning that people will be able to access a suitable vehicle using only their qualifying disability benefit. Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms.

Existing leases and vehicles substantially designed for, or adapted for, wheelchair or stretcher users will continue to benefit from VAT reliefs on advance payments and the IPT exemption, in recognition of the additional costs associated with these vehicles.

Motability Foundation, the independent charity with responsibility for overseeing the Scheme, will continue to offer means-tested grants to support eligible people who would otherwise struggle to afford the advance payment.

The package of reforms to the Motability Scheme announced as part of the Budget will ensure the Scheme delivers fairness for the taxpayer, while continuing to support disabled people. The Scheme will continue to offer a choice of affordable vehicles to meet a range of accessibility needs and offer vehicles which require no advance payment, meaning that people will be able to access a suitable vehicle using only their qualifying disability benefit. Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms.

Existing leases and vehicles substantially designed for, or adapted for, wheelchair or stretcher users will continue to benefit from VAT reliefs on advance payments and the IPT exemption, in recognition of the additional costs associated with these vehicles.

Motability Foundation, the independent charity with responsibility for overseeing the Scheme, will continue to offer means-tested grants to support eligible people who would otherwise struggle to afford the advance payment.

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. Taxation is a vital source of revenue that helps to fund vital public services.

Evidence suggests that businesses only partially pass on any savings from lower VAT rates. In some cases, reliefs do not represent good value for money, as there is no guarantee that savings will be passed on to consumers.

The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.

VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.

HMRC estimate that the cost of a 5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £13 billion this financial year. If the scope were also to include alcoholic beverages, the cost would be approximately £3 billion greater.

We keep all taxes under review, and the Chancellor makes decisions on tax changes at the Budget, in the context of the overall public finances.

HM Treasury is committed to implementing the Public Sector Value Added Tax (VAT) reform which will remove the current disparity for VAT recovery between National Health Service trusts and private companies working in the NHS.