With the government’s plan to tackle the economy unveiled in this week’s Autumn Statement, there’s a lot of information unpack to understand what the planned measures mean for the UK hospitality sector.
We’ve broken down some of the important announcements delivered by the Chancellor and how it will affect pubs, bars and restaurants.
Package of support for business rates
One of the key takeaways from the announcement is the £13.6 billion package of business rates support for companies. The package comes into play from April next year and is welcome news for hospitality venues.
Welcome news from Chancellor of £14bn support on business rates over next 5 years - no details but promise thousands of hospitality and retail businesses will not pay more and govt funded transitional relief. Hospitality was facing nearly £1bn extra bill - welcome relief
— Kate Nicholls OBE (@UKHospKate) November 17, 2022
The business rates relief has also been extended and increased from 50% to 75% for 230,000 businesses in retail, hospitality and leisure sectors.
The support would also include freezing the business rates multiplier for another year until 2023-24 to protect businesses from inflation. The move will save ratepayers £9.3bn over the next 5 years.
Plus, to help businesses adjust to the revaluation of their properties, which takes effect from April 2023, the Chancellor announced a £1.6bn Transitional Relief scheme to cap increases for those who will see higher bills. This limits bill increases for the smallest properties to 5%.
Rise in National Living wages
The National Live Wage is set to rise from £9.50 an hour to £10.42 an hour from April 2023. This represents an increase of 9.7% - the largest rise in the country’s National Living Wage ever.
While it’s positive that the government recognises the need to support those on lower incomes, this will increase the cost of labour among many hospitality venues, many of whom have already faced huge increases in staffing costs in recent years.
“From 1 April 2023, the Government will increase the NLW by 9.7% to £10.42 an hour for those aged 23 and over."https://t.co/iGb9gNDOli
— The Morning Advertiser (@morningad) November 17, 2022
National Insurance
National Insurance thresholds, along with Income Tax and Inheritance Tax thresholds, will be frozen for a further two years until April 2028.
The most profitable businesses will also be asked to bear more of the burden, giving some respite for small businesses. While the threshold for employer National Insurance contributions (NICS) will be fixed until April 2028, the Employment Allowance will remain at its new, higher level of £5,000 and will continue to protect 40% of businesses from paying any NICS at all.
VAT rate freeze
Despite calls from the hospitality sector for a reduction in VAT, the Chancellor confirmed in his budget that the 20% VAT rate will be maintained until March 2026. Those in the industry have been calling for a reduction in VAT for many months, to help them in the face of economic challenges and keep more businesses open. However, while this isn’t the news many in the trade were hoping for, it is a confirmation that there will be no further VAT increases announced by this government.
Hope for the industry
There’s been mixed reactions to the latest fiscal statement from those in the sector. While the extended support for business has been welcomed, there are still some questions about the finer details of what the government’s budget means for hospitality. As this detail is revealed in the coming weeks, we will continue to share the important updates and understand how this affects the industry.
About the author
Mary McCarron
Mary looks after the majority of Matthew Clark's digital marketing comms. After a couple of years working in tech, she found her way back to the hospitality industry and can now be found talking all things cocktails, spirits, beer, softs and more across our website, social media, and other digital channels.
