The UK hospitality industry has been eagerly awaiting Chancellor Rishi Sunak’s budget in the hope that he would provide extensive roadmap for recovery for the industry and while there were some aspects of it that will please the sector, there was plenty that he left out.
With that in mind here are the three key themes to take away from the March update.
Business rates
The business rates holiday in England has been extended by an extra three months up until the end of June. After that they will be discounted by two thirds for a further six-month period up to a maximum of £2m for a closed business. For many though, this does not go far enough.
“Even the rates holiday for retail, leisure and hospitality is not as simple as it sounds. After the first three months it looks like it is going to be really cumbersome for businesses to apply and up to the already over stretched billing authorities to sort out,” John Webber, Head of Business Rates at Colliers, said.
Furlough
As expected the furlough scheme has been extended until the end of September. The date goes beyond the suggested lifting of all restrictions in June, giving companies more breathing space to see how things progress. However, from July employers will be expected to pay 10 percent towards the hours that staff do not work, increasing to 20 percent in August and September.
“We are pleased the Government has extended the scheme, recognising that businesses will still be operating under restrictions even as the economy opens. Furlough must last as long as restrictions of any kind remain in place which prevent businesses from operating as normal,” Merilee Karr, Chair of the UK Short Term Accommodation Association (STAA) and CEO of UnderTheDoormat, said.
“While we welcome the extension of the furlough scheme to September, by which time we hope that all restrictions will be lifted, we would suggest the Government keeps the policy under review as the lifting of furlough should be tied to the removal of all restrictions on trading.”
VAT
Another carrot for the hospitality sector is the continued temporary reduction to VAT to 5 percent to the end of September. The rate will rise to 12.5 percent for a further six months, until 31 March 2022.
UKHospitality Chief Executive Kate Nicholls hopes the government will decide to keep with the interim rate.
“While it would have been better to have extended the 5% rate further, it is now vital that the Government looks at introducing the interim rate for hospitality on a permanent basis,” Nicholls said.
“It would be a positive legacy of an otherwise dreadful year for our sector. A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive."