Scottish hospitality leaders have demanded a VAT cut, warning that the sector is struggling to survive under the current tax burden.

The call, reported by STV News, puts fresh pressure on both the Scottish Government and Westminster to deliver targeted tax relief for pubs, restaurants and hotels north of the border.

Why are leaders calling for a VAT cut now?

Industry figures argue that the current VAT regime leaves Scottish hospitality businesses at a competitive disadvantage and accelerates closures across the trade. Their demand joins a long-running UK-wide campaign, led by bodies such as UKHospitality, to cut the VAT rate applied to hospitality from the standard 20% rate to a level closer to that charged by European competitors.

Scotland's hospitality sector has faced years of cost pressure. Operators have contended with rising input costs, increased business rates and tightened consumer spending, and industry leaders now frame a reduced VAT rate as the most direct lever available to protect jobs and keep venues trading.

What would a cut change for operators?

For pub, restaurant and hotel operators, a lower VAT rate would immediately affect pricing power and margins. Supporters of the proposal argue it would allow businesses to:

• Hold menu and room prices down for consumers under cost-of-living pressure
• Rebuild margins eroded by food, energy and labour inflation
• Compete more evenly with hospitality markets in Europe where reduced rates apply
• Support retention of staff and premises in town centres and rural communities

Industry bodies have repeatedly argued that a reduced rate does not simply cost the Treasury revenue, because lower prices stimulate demand, increase turnover and recover tax through employment and supply-chain activity.

Who decides — Edinburgh or London?

VAT is reserved to the UK Government, meaning Scottish ministers cannot cut the rate unilaterally. Any reduction for Scottish hospitality would require action from the Chancellor, either UK-wide or through a differentiated arrangement for Scotland.

That constraint shapes the political route the campaign must take. Scottish Government support for a cut would strengthen the case made to the Treasury, but the decisive decision sits with Westminster. Hospitality leaders have previously pressed the case in submissions to UK budget rounds and in direct engagement with both governments.

What happens next?

The demand adds to pressure ahead of the next UK fiscal events, where hospitality taxation has become a recurring feature of budget representations. Expect industry bodies to formalise the call in written submissions, seek cross-party political backing at Holyrood, and push for a meeting with Treasury ministers to put a reduced VAT rate for hospitality squarely on the fiscal agenda.