Autumn budget: 50% business rates discount for hospitality

Rishi Sunak delivered the Autumn Budget and Spending Review to parliament today (27 October), announcing a new temporary business rates discount of 50% for England's hospitality sector. 

The chancellor confirmed the government's commitment to reduce the burden of business rates by £7bn over the next five years, as well as to modernise the business rates system with more frequent revaluations every three years. 

"Pubs, music venues, cinemas, restaurants, hotels, theatres and gyms. Any eligible business can claim a discount on their bills of up to 50%, up to a maximum of £110,000," said Mr Sunak. 

Kate Nicholls, chief executive of UKHospitality, commented: “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure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."

Alcohol duty

Freezes on alcohol duty rates have also been pledged to make the system "simpler, fairer, more competitive".

This marks the third consecutive year that alcohol duties have been frozen, resulting in consumer savings of £3bn. The planned increase in duty on beer, spirits, wine and cider has been cancelled. 

The system will adopt a new approach of "the stronger the drink, the higher the rate," said the chancellor. Taxes on red wine, sherry and port will increase, while rose, fruit ciders and low-strength beers will decline. 

“The decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, giving everyone a much-needed break to help them recover from the pandemic," says Miles Beale, chief executive of the Wine & Spirit Trade Association.

VAT overlooked

With the hospitality sector still facing great challenges ahead, Nicholls has urged the government to expand on the detail released in the Budget. 

"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," she says. "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.

“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.”

Wages

The National Living Wage (NLW) will rise to £9.50 from 1 April 2022, a total increase of 59p or 6.6%. 

Alongside the planned NLW increase, the Low Pay Commission recommended significant rises in National Minimum Wage (NMW) rates for younger workers. The 21- to 22-year-old rate will increase to £9.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024.

NMW rates for 18 to 20 and 16- to 17-year-olds will increase in line with underlying wage growth. The minimum wage for apprentices will increase by 51p, bringing it in line with the 16- to 17-year-old rate.

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