The Budget has ushered in a costly new reality for the UK hospitality sector, prompting trade body UKHospitality to warn of mounting pressures from rising taxes and rateable values.
Kate Nicholls, chair of UKHospitality, reacted to the Budget: “Bricks and mortar hospitality businesses are being taxed out, and they have been penalised by the broken business rates system for far too long.
“Today (26 November), the Chancellor recognised the importance of hospitality and provided a permanently lower multiplier for hospitality businesses – reforms secured by UKHospitality.
“However, the 5p discount is only a quarter of the maximum 20p discount the government proposed last year.
“This is particularly frustrating given changes to business rates valuations will mean that many hospitality businesses’ tax bills will still significantly rise, alongside increases to the minimum wage, adding extra cost. Business tax rates for hospitality must continue to fall for the rest of this parliament.
“The government has heeded our calls for significant transitional relief for businesses, which will mitigate the worst impacts of the revaluation.
“Hospitality remains under significant cost pressures, with the highest tax burden in the economy. We will continue to campaign for additional support for the sector, including further business rates discounts.”
Wage rises, holiday taxes and steep increases in rateable values are ‘wiping out’ the 5p business rates discount for hospitality.
Additional cost and tax increases are putting further pressure on businesses and reducing job opportunities, particularly for young people.
This is all, ultimately, passed through to consumers and, as the Office for Budget Responsibility notes, is keeping inflation higher for longer.
UKHospitality said hospitality and the high street has once again been disproportionately hit, risking the creation of a ‘two-tier economy’.
New rateable values, published after the Budget and used to determine rates bills, are stark for hospitality businesses. Accommodation businesses are seeing rateable values increase 76%, pubs by 30%, and restaurants and cafes by 14%.
Kate Nicholls continued: “Wage rises, holiday taxes and monumental increases in rateable values have put even further pressure on hospitality businesses, as a result of this Budget.
“A 5p business rates discount is simply not enough to offset these costs and redress the damage it will do to business viability and job opportunities.
“This is exactly why we called for the government to use the maximum possible discount it had the power to implement, which could have genuinely delivered lower business rates.
“Instead, we have a situation where hospitality businesses are checking their wage bills and rateable values, and their hearts are sinking at the eye-watering increases before them.
“Once again, the government is trying to balance the books disproportionately on the backs of the high street – and risks creating a two-tier economy.
“Our tax burden remains the highest in the economy, and we need urgent action to reduce the cost of doing business. The only way to cut the cost of living is to reduce the cost of doing business, and this Budget does the opposite.”
