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Business rates for hospitality cut by 50% for one year

Published:  27 October, 2021

Today’s Budget announcement included a year-long cut to business rates for the leisure and retail industry, meaning pubs, restaurants and bars will pay 50% less for 12 months.

under the terms of Sunak's announcement, any eligible business from across the pub, music venue, cinema, restaurant, hotel, theatre and gym sectors can claim a discount on their bills of 50% up to a maximum of £110,000 for the 2022-23 tax year. 

“That is a business tax cut worth almost £1.7 billion,” Sunak said.

The cut has sounded through the hospitality and late-night sector, which is grappling with all sorts of Covid-related issues, including rising inflation putting up costs on goods and services. “Finally, the Chancellor has recognised the strength and importance of the hospitality sector,” Sacha Lord, night time economy adviser for Greater Manchester, said.

He welcomed the “much-needed business rate discount and the introduction of tax reforms on alcohol, both of which will go far in helping hospitality operators, especially wet-led pubs, maintain a steadier footing while they recover."

However, he was “disappointed there was no reference to extending the current 12.5% VAT rate for hospitality which will return to 20% in April next year and see a surge of operators closing under the weight of the increase.

“Despite outward appearances and busy nightlife scenes across the UK, the sector is still struggling. Operators will take at least three years to recover from this pandemic and many remain in very precarious financial difficulties which could see them go under at any moment.”

Paul Newman, RSM UK’s head of leisure and hospitality, added: "Business rates relief will be welcome news to small independents but the £110,000 cap for multi-site operators is a drop in the ocean, particularly when the sector is facing a perfect storm of cost increases in wages, supply chain and energy bills. These price hikes translate to a 10% plus inflationary burden so the rates reform and 3p cut on the cost of a pint of beer simply does not go far enough to support the sector’s recovery post pandemic."

Sunak said the relief is part of the government’s efforts to unleash the “dynamism and creativity of British businesses with a simpler, fairer and more competitive tax system” which will see alcohol duty rate reduced from 15 to six.

The cut was one of many government measures surrounding business rates, including the introduction of a new revaluation cycle that will be delivered from 2023 and a new investment relief to encourage businesses to adopt green technologies like solar panels.

There will also be a new ‘business rates improvement relief’. From 2023, firms will be able to make property improvements, and, for 12 months, pay no extra business rates.

“Together with small business rate relief, this means that over 90% of all retail hospitality and leisure businesses will see a discount of at least 50%. Aside from the Covid reliefs, this is the biggest single year cut to business rates in over 30 years. Taken together, today’s budget cuts business rates by £7 billion over five years,” Sunak said.