Business rates relief slashed in the short term
Presently, hospitality businesses have been able to claim a 75% reduction in their business rates bill. This reduction was introduced in November 2023, with a maximum reduction capped at £110,000. This followed a number of relief schemes targeted at the hospitality sector, including:
- 2019: The government introduced a discount on business rates for occupied retail properties
- 2020: The scheme above was extended to include hospitality and leisure
- 2021: Eligible retail, hospitality and leisure properties received 100% business rates relief from April 1 to June 30
- 2022: Eligible properties were entitled to 50% reduction in their business rates from April 1 to March 31.
The 75% reduction in business rates for hospitality was set to expire on March 31 2025. This relief figure has now been set to “40% for the retail, hospitality and leisure industry for 2025/6 up to a cap of £110,000 per business”.
Long term changes to rates
The Chancellor also announced plans to freeze the business tax multiplier, which is currently set to 49.9p. This multiplier is used to calculate the business rates bill, with the ‘rateable value’ multiplied by this figure. The rateable value of a commercial property was based on the valuation of the property as of 1 April 2015. This valuation is assessed to be the rental value of the property should it be on the open market.
More significantly, Labour have set out plans to introduce a permanently lower rate of tax for retail, hospitality and leisure (RHL) properties. This is in recognition for the role that these businesses play on our high streets. This move is set to be funded by an increased multiplier for the more expensive properties.
CAMRA have expressed optimism that these moves will help to put “an end to the current system where pubs are penalised by unfair rates bills”.
National Insurance increase
The National Insurance contribution rate will increase 1.2% from 13.8% to 15%, as well as a reduction in the threshold as to which employers will start to pay the tax falling from £9,100 to £5,000. These combined measures are forecast to bring in an extra £25 billion in tax per year.
Alongside these are measures designed as protections for small businesses. Employers with an NIC bill of less than £100,000 will see a rise from £5,000 to £6,000 for their tax free allowance.
Increased minimum wage
The legal minimum wage for over-21s is to rise from £11.44 to £12.21 per hour from April, alongside the rate for 18-20 year olds increasing from £8.60 to £10. Reeves set out the intention to move towards a “single adult rate” to remove this age discrepancy. This will be have impacts on the hospitality industry in particular, with up to 50% of waiters and waitresses, 48% of bar staff and 48% of coffee shop workers aged between 16 and 24 according to ONS statistics.
How will this affect your restaurant?
Every restaurant will be impacted differently by the changes introduced in the August 2024 Budget. Speak to a hospitality consultant to receive personalised guidance and advice on how to best navigate the industry in the coming weeks, months and years.