UK – A joint statement by The British Beer and Pub Association, the British Institute of Innkeeping and UKHospitality has called on the government to make COVID-era rates relief for hospitality permanent amid impending the relief’s end on April 1, 2025, and taxes rise.
Pubs and restaurants are sounding alarms about potential closures and a challenging Christmas season if Rachel Reeves’s upcoming budget raises taxes and ends COVID-era relief on business rates.
Reeves is anticipated to unveil a budget on Wednesday that seeks to increase taxes to fund enhancements in public services, with Labour sources suggesting a combined tax increase and spending cuts totaling £40 billion (US$51.9 billion).
However, hospitality businesses are especially concerned about the impending expiration of business rates relief next spring, which could result in their tax bills rising dramatically.
This relief, introduced in 2020 to support pubs, restaurants, bars, and cafes during the pandemic, provided substantial financial aid while the government mandated closures.
Jeremy Hunt, Reeves’s Conservative predecessor, last extended this relief in November, which currently offers a 75% discount on business rates, capped at £110,000 (US$142,672), until April 1, 2025.
A recent NielsenIQ survey revealed concerning trends: 54% of the businesses surveyed indicated they would reduce their workforce, and 51% would forgo planned investments if full business rates were reinstated.
Furthermore, over a quarter of respondents mentioned that they would consider closing at least one location if their rates returned to pre-pandemic levels.
This comes amid a backdrop of declining consumer confidence, as highlighted by the GfK consumer confidence survey, which noted a drop in confidence this month.
Some analysts have expressed concerns over a potential “vibe session,” suggesting that consumer spending may decline even as the broader economy remains stable.
Anticipated tax measures may include a “stealth” freeze on income tax thresholds, which could raise revenue while keeping headline rates unchanged. Additionally, employers might limit pay increases in response to expected higher national insurance contributions.
According to a survey conducted by RSM UK, 42% of UK consumers plan to spend less this Christmas if budget tax increases affect their disposable income.
Saxon Moseley, a partner at RSM UK, warned that any tax changes impacting consumer confidence could significantly affect spending in the crucial festive period.
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