Tourism Minister Richard Lochhead has written to the UK Government ahead of the autumn budget statement calling for a reduction in VAT to support Scotland's tourism and hospitality sector.

Farms and crofts across Scotland attract more than 1.5 million visitors annually through agritourism, with plans to increase this figure to 2 million per year by 2030.

In his letter to Sir John Whittingdale, Minister of State for Media, Tourism and Creative Industries, and Kevin Hollinrake Parliamentary Under Secretary of State Kevin Hollinrake, Mr Lochhead describes the tourism and hospitality sector in Scotland as ‘vitally important’ to the economy, accounting for 8% of jobs, 9% of businesses.

He adds: “I am committed to doing all that is possible to help the sector within the Scottish Government’s increasingly constrained resources, but I would like to raise with you the issue of VAT, which is of course reserved and upon which only the UK Government can take action on at this time.

“During the pandemic, the tourism and hospitality sector benefited from reduced levels of VAT, 5% then 12.5%, before returning to the standard 20% rate in April last year. The industry continues to make a strong case for the return of a reduced rate of VAT for the sector.

“Many countries, particularly across Europe but also elsewhere, maintain reduced rates of VAT for tourism and hospitality. I believe the UK Government could support tourism and hospitality by looking again at a reduced rate of VAT for the sector here, and I ask you to support this and make the case for it to your Ministerial colleagues, particularly ahead of the autumn budget statement on 22 November.

“This could help boost business viability in a challenging trading climate. The cost to the Exchequer of a VAT cut could be partly mitigated by stimulating demand in the sector.

“My colleague, the Deputy First Minister and Cabinet Secretary for Finance, Shona Robison MSP, has included this ask for a reduced rate of VAT for tourism and hospitality in her recent pre-budget correspondence to the Chancellor.”

Agritourism sector lead, Caroline Millar said: "The UK has one of the highest VAT rates for tourism in Europe. In some other countries such as Ireland VAT rates are at 9% for tourism and hospitality. There are also many European countries that value the role that agritourism plays as a key driver for the rural economy and have either income or the equivalent VAT tax incentives specifically for agritourism, which have helped to support many thousands of rural and farming businesses.

"As a sector, we have been talking to politicians about this for some time. I met Robbie Moore MP, recently appointed as Parliamentary Under-Secretary for DEFRA, this week at the Nuffield Conference this week and discussed this very topic and we agreed that we would arrange to meet in London to discuss.”

Tourism businesses are estimated to add £3.4bn in gross value added to the economy.