Cautious welcome for Chancellor’s cut in business rates
The hospitality and retail industries have welcomed the business rates cut announced by Chancellor Rishi Sunak in his recent Autumn Budget.
Restaurants, bars, shops and gyms will benefit from a temporary 50 percent cut in their business rates, offering welcome relief to those that have been badly hit by the COVID-19 pandemic.
But any hope of a move to keep VAT at 12.5 per cent for the hospitality and leisure sector were dashed however, and the rate will revert to 20 per cent in April.
UKHospitality’s Chief Executive, Kate Nicholls, welcomed the move to extend the 50 per cent business rates relief for the hospitality and leisure sector for the next financial year.
But in a tweet she said: “The business rates relief is capped at £110k per company so that is the maximum your rates bill can reduce. While it will benefit many smaller businesses, this will limit the impact for larger premises and multi-site businesses.”
CBI Director General Tony Danker added: “On business rates, the Chancellor made real strides in making the system more palatable for businesses in the shorter term.
“More frequent valuations, wider reliefs and improving the incentives for firms to decarbonise their premises is what firms have been calling for. But he said the Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.”
Mr Sunak said that in the 2022-23 tax year, pubs, music venues, cinemas, restaurants, hotels, theatres and gyms would be able to claim a discount on their bills of 50 per cent, up to a maximum of £110,000. He said that was a tax cut worth almost £1.7bn.
In addition, he has scrapped the 2022 planned annual increase in rates for all firms for the second year in a row.
Kate Nicholls added: “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move to extend the 50 per cent business rates relief for the hospitality and leisure sector for the next financial year.
“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 per cent 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 per cent of VAT for the sector.
“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”
The Chancellor said that in conjunction with the existing Small Business Rates Relief, the rates cut meant more than 90 per cent of all retail, hospitality and leisure businesses would see a discount of at least 50 per cent.
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