BAD NEWS AND GOOD NEWS: THE IMPACT OF BUDGET 2024 ON THE HOSPITALITY & LEISURE SECTOR

Business Rates specialists at Harris Lamb Property Consultancy have analysed the effects of the first Labour Budget for 14 years and are preparing to assist clients in understanding and reducing their Business Rate liability.

Britain’s first female Chancellor, Rachel Reeves, announced a slashing of the Retail, Leisure and Hospitality Relief for Business Rates from 75 per cent to 40 per cent, which will impact every leisure and hospitality business in the country that has any liability for Business Rates attracting this relief.

The Relief is still capped at £110,000 of total liability but will see all eligible premises hit by an enormous hike in liability from next April.

In addition, the small business tax multiplier will be frozen next year.

Victoria Trafford, Director of Harris Lamb’s Licensed and Leisure team, said: “While we had hoped that the higher level of relief would be extended, realistically we knew that at some point, it had to reduce, and we had been expecting as much. The decision to cut the relief from 75 per cent to 40 per cent will mean that the amount payable in Business Rates will more than double and this is in excess of what the industry can stand at this time of high costs and falling profits. It could have been worse but that is the difference between catastrophic and disastrous effect so is merely splitting hairs at this stage in the recovery of the industry after the impact of Covid and the cost-of-living crisis.

“Unfortunately, the reality is that only 25 per cent of pubs and restaurants are currently profitable; and we’ve seen many much-loved independents across the region close their doors as licensees have struggled and failed to keep pace with energy and product costs. Many more will now have tough decisions to make as they get to grips with the increased charges,” she said.

However, the business welcomed the news that a long-awaited reform of the system has been pledged for 2026/27.

“According to the Chancellor, this reform will take place over the next two/three years with the introduction of two permanently lower tax rates for retail, hospitality and leisure properties, which she herself says ‘make up the backbone of high streets across the country’, which will in turn lower multipliers for the sector from 2026-27. This will be funded via a higher multiplier for the most valuable properties.

“This announcement is extremely welcome, and long-overdue, but how many existing hospitality and leisure businesses will survive long enough to benefit from the overhaul is another matter entirely,” says Victoria.

As it gears up to plan the reform, the Government has begun a business consultation process in a Discussion Paper, setting out its priority areas.

Furthermore, the Valuation Office Agency is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of Business Rates valuations by disclosing more information and expecting and demanding more information from Ratepayers. This demand includes the threat of increased fines for non-compliance.

For guidance and support with Business Rates, contact Victoria Trafford on 07710043234 or victoria.trafford@harrislamb.com, or James Ward on 07854999410 or James.ward@harrislamb.com.