Table of Contents
- Hospitality businesses will have a 40% discount on their business rates bills
- Reeves said business rates were “a major source of concern” for major businesses.
Hospitality businesses will receive less business rates relief from the next financial year, Chancellor Rachel Reeves’ Budget has confirmed.
Pubs, restaurants and bars will be allowed a 40 per cent discount on their business rates bills from April up to a maximum limit of £110,000 per business.
They are currently enjoying a 75 per cent refund introduced by then chancellor Rishi Sunak in 2021 to try to revive the British hospitality sector, which was hit by Covid-related closures and business restrictions.
Less generous: Pubs, restaurants and bars will be allowed a 40 per cent discount on their business rates bills from April up to a maximum limit of £110,000 per business.
While pandemic-related restrictions have ended, the industry has seen an increase in site closures due to rising energy prices, consumer spending pressures and industrial action by rail workers.
Like other industries, hospitality employers have long complained about the business rates regime, arguing it is squeezing profitability and hurting traditional operators.
Reeves told the Commons that business rates were “a major source of concern” for big businesses.
He blamed the previous government for “creating a chasm” by failing to promise to extend temporary business rates relief beyond March next year.
In addition to the new 40 per cent rates relief, Reeves announced plans to continually reduce business rates multipliers from 2026-27 for retail, hospitality and leisure businesses.
He also said pub-goers would get “a penny off a pint” with a 1.7 per cent reduction in tariffs on brewed goods, affecting around two-thirds of drinks sold in pubs. .
However, hotel groups say costs will rise and the government is not providing enough support to the industry.
Simon Dodd, chief executive of Young’s, said the reduction in recruitment service is “a small step towards reducing the enormous tax burden our industry faces.”
“Unfortunately, given the other measures announced today, there are many more snakes than ladders for the hospitality sector, a vital industry for the communities we serve and for the country’s economy as a whole.”
Employers’ national insurance will rise by 1.2 percentage points to 15 per cent, while the secondary threshold will drop from £9,100 to £5,000, measures which Reeves said would raise £25bn a year.
At the same time, the national living wage is rising by 6.7 per cent to £12.21 an hour, and the minimum wage for 18-20 year olds is rising by 16.3 per cent to £10 an hour.
Conor Sheridan, CEO and founder of restaurant software provider Nory, believes the NLW increase “will have a massive impact on labor costs, which already make up a significant portion of many venues’ business expenses.”
He added: ‘As we move forward, it is essential that the Government prioritizes measures that help alleviate these pressures.
“Without targeted support, we risk stifling the growth and recovery of a vital sector that has the potential to drive economic growth and create more jobs in our communities.”
Hospitality employs 3.5 million people in the UK and contributes £93 billion a year to the country’s economy, according to trade body UKHospitality.
Kate Nicholls, its chief executive, said: ‘This budget is the latest blow for hospitality businesses. Rising taxes, rising costs and fragile consumer confidence risk stalling growth.’
However, he praised Reeves for following UKHospitality’s advice to have a permanently reduced level of business rates for hospitality.
“Leveling the playing field in this way recognizes the importance of the high street and the role it plays in our communities and economy,” Nicholls added.
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