Business rates relief extended until 2025

Many hospitality operators breathed a sigh of relief on 22 November, as the chancellor Jeremy Hunt confirmed that the 75% business rates relief will be extended until 2025.

Hunt also froze the Small Business Multiplier, which will affect some operators, but the Standard Multiplier – where a business’ rateable value is £51,000 or more – will rise with inflation.

In an immediate reaction on social media, UKHospitality CEO Kate Nicholls pointed out that “many small businesses operate from larger standard rated premises, particularly hospitality”.

"The standard multiplier rising by 6.4% will see businesses representing almost two-thirds of the sector’s trade still facing a £150m rates hike," she later added in a statement. "This will only put more pressure on consumer prices and inflation, at a time when businesses are still grappling with high costs of energy, food, drink and wages.

"We're pleased that the chancellor has also acted on our proposal and frozen alcohol duty until August next year. This is now one less cost venues have to worry about. With duty frozen this should substantially constrain any cost increases passed on by drinks producers.

"While it's disappointing that employer contributions to National Insurance have not also been cut, the reduction in National Insurance for employees will put more money in people's pockets and provide a boost for hospitality in the new year, often a challenging time for the sector," Nicholls concludes. 

The government has said that its business rates support package is worth £4.3bn over the next five years, including a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which it says will protect around 90% of ratepayers for a fourth consecutive year.

Industry commentators have pointed out that this doesn't address the business rates burden in the long-term and that other UK governments also need to act on the issue.

An "uphill battle"

The growing challenge of inflation, coupled with rising wage costs, has placed many independent hospitality businesses under threat. "It's obvious that a 2% reduction in National Insurance will not cover a 10% wage increase," says Jay Rahman, founder of Indian restaurant concept Prithvi. "As prices soar and wages escalate, it's becoming a struggle for us to keep pace. We find ourselves caught in a cycle where the economic landscape is shifting faster than we can adapt. Finding an extra 10% in profit to cover wage increases before other rises in utilities and rent is just not going to be possible for so many small hospitality businesses.

"Without the anticipated report, we're facing an uphill battle to balance these escalating costs while maintaining the quality and integrity of our business," he adds. "It's a daunting reality where our ability to keep up is severely strained, and the lack of substantial assistance amplifies this struggle. As a sector, we must now work together to ensure a reduced VAT is incorporated into the spring budget."

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