Disappointing Budget for restaurant operators

Restaurant owners and operators have been left deflated by the Labour government’s first Budget since coming to power.

Although there were small points of positivity delivered by the chancellor Rachel Reeves, decisions on business rates and National Insurance contributions will mean increased costs for businesses.

There was also the confirmation that Labour is increasing the National Living Wage from £11.44 to £12.21 an hour from April 2025. The National Minimum Wage for 18- to 20-year-olds will also rise from £8.60 to £10.00 an hour.

Reeves announced she will continue the business rates relief from April 2025 for hospitality venues, but at a lower rate of 40%, instead of the current 75%, up to a cash cap of £110,000 per year. There will then be a full reform of the business rates system in 2026/27.

While workers won’t see an increase on the basic, higher or additional rates of Income Tax, National Insurance or VAT, National Insurance contributions by employers will rise from 13.8% to 15%. In addition, the threshold at which businesses start paying National Insurance on a workers' earnings will be lowered from £9,100 to £5,000, with the Employer Allowance doubled to £10,500.

Alcohol Duty was cut by 1.7% for draught alcohol products, but duty rates on non-draught products will increase in line with RPI from February next year.

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