One of the most discussed topics in the run up to this week’s budget was the potential adjustment of taxes.
Speculation surrounding the possible increases in employer National Insurance Contributions (NICs) was rife, and it’s fair to say businesses will shoulder the brunt of the tax raid.
The change in NICs has been a mixed bag for all businesses – including those across the hospitality sector.
While the employers allowance raising from £5,000 to £10,500 has been hailed by many as a huge step in protecting small businesses, coupled with the NICs rise to 15%, the threshold being halved, and the increase in minimum wage increase of over 7%, the total increase in costs for all employers could still be significant and ultimately slow down wage growth in the hospitality sector.
As Kate Nicholls has already stated, these changes are particularly worrying for an industry that often operates on narrow margins and is already struggling with like-for-like sales.
In addition to this, business rates reform has side-stepped the support smaller businesses need. We all know that small businesses are the backbone of the hospitality industry. They urgently need support to cope with rising costs, reduced consumer spending, and ongoing macro and micro economic pressures.
The change to the reduced level of 40% from 75% is another cost businesses will have to deal with, and for many businesses their rates bills will still increase from April 2025. While Christmas is often a buoyant time for the hospitality industry, this increase will come swiftly on the heels of winter which is already a challenging few months for many hospitality businesses.”
Philip Harrison, Chairman of Harrison, said, “This was a pivotal moment for the government to make the right choices so we could see a stronger, more resilient hospitality sector emerge.
“In addition, experts were advocating for increased government investment in sustainability initiatives and workforce training in hospitality. Given the urgent need for environmental compliance, government backing is essential. Sustainability isn’t just a trend; it’s a requirement. The government must better support the transition to greener practices to future-proof businesses.”
