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In his Autumn Statement of November 17, 2022, the UK's Chancellor of the Exchequer Jeremy Hunt set out a number of measures aimed at ensuring businesses pay their fair share when it comes to achieving the Government’s key aims of reducing national debt and achieving fiscal sustainability. However, the Government remained committed to supporting businesses to invest and grow, and recognized that businesses in the retail, hospitality and leisure sectors are facing particular pressure in the current environment. Against that backdrop, the Chancellor introduced his business rates support package, which should be a real positive for the hospitality sector.
Finance & Tax
Freezing business rates multipliers
Business rates multipliers will be frozen in 2023-2024 at 49.9 pence and 51.2 pence, preventing them from increasing to 52.9 pence and 54.2 pence. This amounts to a tax cut worth £9.3 billion over the next five years and forms the basis of the Government’s business rates support package. The freeze will support all ratepayers (including those in the hospitality sector), regardless of size, and make bills 6 percent lower than they would otherwise have been, before any further specific reliefs are applied.
Transitional relief scheme
Bill increases caused by changes in rateable values at the April 1, 2023 revaluation will be capped at 5 percent, 15 percent and 30 percent respectively, for small, medium and large properties in 2023-2024. These targeted caps will be applied before any other reliefs and will support 700,000 ratepayers.
Retail, hospitality and leisure relief
Business rates relief for eligible retail, hospitality and leisure businesses will be extended and increased from 50 percent to 75 percent, up to £110,000 per business in 2023-24. This support will be available to around 230,000 retail, hospitality and leisure properties, and its total value is estimated at £2.1 billion.
Supporting small business scheme
More than 80,000 small businesses that are losing some or all eligibility for either Small Business Rates Relief or Rural Rate Relief will see any bill increases as a result of such losses/reductions capped at £600 per year from April 1, 2023.
Improvement relief
The measure set out in the Autumn Budget 2021 that ensures ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy will take effect from April 2024 and remain available until at least 2028.
Conclusion
Amid rising inflation, a global energy crisis and the continued fallout from the COVID-19 pandemic, business rates (and increased business rates) were a serious issue for the hospitality sector, as well as others. It is therefore welcome that the Chancellor has recognized this and brought forward a support package that will benefit the hospitality sector, in particular, as part of the Government’s growth strategy. Obviously, it is not a panacea for all the issues that the industry currently faces, but it is welcome nevertheless.
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