The Spring Budget introduced several measures impacting the hospitality sector, designed to create a more supportive fiscal and operational environment for businesses. Here is a summary of the key announcements:
- National Insurance Contributions Cut: The reduction from 8% to 6% for self-employed individuals and from 10% to 8% for employees is expected to increase disposable income, directly translating into greater spending power that could benefit hospitality venues. This change signifies a potential increase in consumer visits and spending across restaurants, bars, and leisure facilities.
- VAT Registration Threshold Increase: The increase to £90,000 is particularly advantageous for small, seasonal, and micro hospitality businesses. By increasing the threshold, these businesses will face less administrative burden and can allocate resources towards enhancing customer experiences and service quality, effective April 2024.
- Recovery Loan Scheme Extension: Now known as the Growth Guarantee Scheme, the extension until March 2026 provides crucial financial backing to SMEs within the hospitality sector. This move is aimed at fostering growth, aiding recovery, and ensuring businesses have access to necessary funds for operation and expansion.
- Alcohol Duty Freeze: By extending the freeze until February 2025, the Budget provides marginal relief to alcohol producers. While the direct benefits to hospitality businesses might be limited, it could help in stabilising costs for venues that offer alcoholic beverages, potentially supporting profit margins.
- Furnished Holiday Lettings Regime Abolished: The abolition of this regime from April 2025 may affect the accommodation sub-sector, particularly short-term holiday lets and caravan parks, by removing tax benefits currently enjoyed. This change aims to equalize the competitive environment but requires businesses to reassess their tax and operational strategies accordingly.
- Full Expensing Extended to Leased Goods: Supporting investment in leased assets, this policy can aid hospitality businesses in upgrading or expanding their asset base without incurring immediate full costs, a move that could enhance operational efficiency and customer service offerings.
- Violence Reduction Units (VRU) Funding: The £75 million allocation towards VRUs addresses a critical concern for the hospitality sector – safety. By focusing on reducing serious violence, including thefts and crimes in tourist-heavy areas, this initiative could improve the overall attractiveness and security of hospitality venues, encouraging more patrons.
- Capital Gains Tax Reduction: Lowering the tax from 28% to 24% serves as an incentive for property sales, potentially easing the conversion of properties into short-term lets or encouraging sales over rentals. This could impact the availability and dynamics of the local housing and accommodation market, affecting hospitality businesses indirectly.
- Free Childcare Provision Confirmation: Increasing the hourly rate for childcare providers aims to alleviate work barriers for parents. This could have a positive indirect effect on the hospitality sector by expanding the workforce, addressing staff shortages, and enabling more flexible work arrangements.
- Fuel Duty Freeze: The extension of the fuel duty freeze aids in controlling transportation costs for businesses and employees within the hospitality sector. This measure helps manage operational expenses, particularly for venues reliant on delivery services or staff commuting by vehicles, until March 2025.
The Spring Budget’s announcements present a mixed bag of opportunities and challenges for the hospitality sector. From financial relief measures to operational adjustments, businesses will need to navigate these changes strategically.
At Beavis Morgan, our extensive experience in the Hospitality & Leisure sector enables us to deliver high-quality services with a hands-on approach and a personal touch. We recognise that this industry is unique, facing a multitude of challenges and opportunities. That’s why we’re here to offer tailored solutions and expert advice to businesses in this sector, including:
- Restaurants & Bars: From independent bistros and pubs to upscale dining establishments and wine bars, we understand the intricacies of the restaurant business. Our team can assist with everything from compliance to strategic growth.
- Food Delivery: The evolving landscape of food delivery services demands a deep understanding of the market. We provide guidance on tax efficiency, compliance, and operational strategies.
- Accommodation and Hotels: The hospitality sector is closely linked to the accommodation and hotel industry. Our expertise covers a wide range of services to help hotels and accommodations thrive.
Contact your usualBeavis Morgan Partner orMatthew Burge, Partner and Head of our Hospitality Sector team, to find out more about how we can assist you and your hospitality sector business.