Value Added Tax (VAT) was reduced in July 2020

Value Added Tax (VAT) was reduced in July 2020 from 20 percent to 5 percent for the hospitality and tourism industry in the UK. The policy was expected to last for a temporary period between 15 July 2020 and 12 January 2021, but has been extended until 30 September 2021. Use economic theory and relevant supporting material to examine the likely effects of this policy on businesses, consumers and the government