Budget offers some help for hospitality

Ahead of today’s budget, there have been plenty of calls for a helping hand for hospitality. However, what Rishi Sunak dished up appeared to offer aid for the industry, while falling short of the level of reform some were hoping for.

The headline move was a shake-up of business rates. In a move that the chancellor claimed represented a tax cut worth almost £1.7bn, eligible businesses in the hospitality, leisure and retail sectors can claim a discount of 50% up to a maximum of £110,000. Also, from 2023, companies will be able to undertake property improvements and not have to pay any extra business rates for a year.

Kate Nicholls, chief executive of UKHospitality, said: “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.”

There is also big news regarding alcohol provision, with taxes on draft beer and cider and sparkling wine to be cut. In further good news, increases in duty on spirits, wines, cider and beer planned for midnight on Wednesday have also been cancelled.

Stronger drinks will face a rise from 2023, however, under a new system that imposes higher duties for higher percentages. Sunak claimed the move to be “the most radical simplification of alcohol duties for over 140 years”.

Nicholls reacted: “The chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.”

She added: “Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13% inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the government go further to support businesses in our sector.

“The most effective way to achieve this would be to maintain the current lower 12.5% of VAT for the sector. The chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.”


You may also be interested in…