In a pivotal announcement during the Autumn Statement, Chancellor Jeremy Hunt has delivered a much-needed boost to the hospitality sector by extending business rates relief for an additional 12 months. This extension is a lifeline to retail, hospitality, and leisure businesses, demonstrating the government's commitment to supporting these vital industries, even as the chancellor emphasises the need to phase out temporary support measures gradually.
Under this extended relief scheme, eligible businesses can continue to claim a 75% discount, saving them up to £110,000 annually. This translates to a significant £12,800 in yearly savings for the average pub. Chancellor Hunt expressed the importance of recognising "the role of pubs and high street shops in our communities" and announced freezing the small business multiplier for another year. However, the standard business multiplier will increase by 6.4%.
Kate Nicholls, Chief Executive of UKHospitality, commended the chancellor's actions, saying, "The chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country." Nicholls highlighted the importance of freezing the small business multiplier to assist vulnerable businesses. However, she expressed concern about the 6.4% increase in the standard multiplier, which could lead to a £150 million rate hike for companies, adding to the pressures of rising energy, food, drink, and wage costs.
In addition to the business rate relief extension, Chancellor Hunt made headlines by freezing alcohol duty and committing to the "Brexit pubs guarantee." He assured the public that the duty on a pint would remain lower than in retail stores, and all alcohol duty would remain frozen until August 1 of the following year, a move celebrated by the UK Spirits Alliance and distillers nationwide.
Furthermore, the chancellor confirmed a significant increase in the National Living Wage, with a nearly 10% rise from £10.42 to £11.44, effective from April 1, 2024, and extended eligibility to 21- and 22-year-olds for the first time. This increase, the largest ever in the National Living Wage, fulfils the government's promise to "eliminate low pay altogether."
Chancellor Hunt emphasised the government's commitment to long-term decision-making, rejecting the notion of big government, high spending, and high taxes, as they aim to reduce debt, cut taxes, and reward work. He also announced reforms to the planning system to expedite major business applications, with local authorities recovering processing costs if new timelines are met, or fees automatically refunded automatically.
Moreover, the Autumn Statement included a 2% reduction in National Insurance, from 12% to 10%, translating to a tax cut of £450 for an employee with an average salary of £35,000, effective from January 6, 2024. The chancellor abolished Class 2 National Insurance for the self-employed and unveiled plans to roll out 30 hours of free childcare for parents of one- and two-year-olds beginning in April.
Despite these positive developments, the chancellor did not mention reducing VAT for the hospitality industry, despite industry campaigns. Calls for VAT-free shopping for overseas visitors also went unaddressed in his speech to the House of Commons. To read more about the Autumn Statement click here.
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