8 November 2018
With each sector vying over the public spending ‘head room’, how has the hospitality industry fared in the Chancellor’s Budget?
The most discussed saving grace for high streets came via the pledge to slash business rates by up to a third for smaller British retailers and restaurants with a rateable value of less than £51,000. This, along with the £675 million fund to facilitate redevelopment of under-used retail areas, will help to take some of the heat away from our failing high streets and pave the way for SMEs and independents to make their mark.
For some years the consensus regarding the spending of disposable income has been a shift away from ‘things’ and towards ‘experiences’. It is therefore helpful to distinguish the sector between retailers and restaurants. Despite the roll-call of profit-warnings and closures coming from the biggest names in casual dining (Jamie Oliver’s, GBK, Gaucho - to name a few), but at a quick glance, dining out is thriving.
Considering the shift towards using disposable income for ‘experiences ‘ rather than ‘things’, one highly relatable topic was the freeze on beer, cider and spirits. Conversely, wine tax will rise in line with inflation. According to the Wine and Spirit Trade Association, the Budget will mean a 3.1% rise in wine duty, and therefore ‘actively undermines a sector that has been hardest hit since the Brexit Referendum’. Consequently, while the Budget smiles upon the traditional corner pub, wine bars and restaurants will suffer.
Despite the savings elicited by the new business rates bill, there has been an element of disappointment among bricks and mortar businesses, owing to the lack of level playing field between their on-the-high-street businesses and online retailers who escape the same level of tax. It is their view that a retail business should be taxed as a retail business, regardless of whether they operate via out of town warehouses or from a shop residing in a city centre. The lack of relief granted to these businesses is part of the reason why retail giants such as Amazon are miles ahead on the retail market. The Chancellor aimed for a greater degree of equality by introducing a 2% tax on UK-sourced income for digital services, but these efforts have been branded insufficient by onlookers.
The Budget has also been criticised for largely ignoring the leisure industry, with emphasis on the failure to provide resolutions to the public’s health deficiencies. The World Health Organisation considers the UK one of the lowest ranking nations for inactivity; ukactive affectingly labelled the Budget a ‘missed opportunity for preventative health solutions’. The distinct lack of attention towards sport and leisure has been branded inadequate. Accordingly, ukactive states that failure to tackle the nation’s inactivity ‘would mark the Chancellor’s pledge to "deliver for future generations" as empty rhetoric’.
Lesser known tax relief beneficiaries in the hospitality industry include wedding sectors, who will benefit from less stringent rules such as more flexible hours for outdoor food and drink consumption.
If you would like any advice about the topics covered in this article, please contact please contact Martin Jones.
Sources
Budget blow will mean price hikes for wine, WSTA
ukactive responds to the 2018 Budget: Missed opportunity for preventative health solutions, ukactive (30 October 2018)
