Inflation fell to 1.7% in September, down from 2.2% in August, as reported by the Office for National Statistics. This inflation rate is used to determine the annual increase in business rates in England, which could lead to an additional £48 million burden for hospitality businesses, according to the trade body UKHospitality (UKH).
This £48 million increase will add to the £866 million that the sector may face if business rates relief is removed next year, bringing the total impact on the sector to £914 million in April, they report. UKH indicates that business rates currently constitute about 5% of turnover in the hospitality sector, and without intervention, this percentage could rise significantly, with larger establishments potentially incurring a £33,500 increase in rates.
UKH is calling on the Chancellor to take action to prevent what they label a ‘cliff edge scenario’ following the end of relief and to establish a lower, permanent, and universal multiplier for the hospitality sector. Kate Nicholls, UKH’s chief executive, stated, “These inflation figures confirm that hospitality is set for an eye-watering £914 million tax bill in April, if the Chancellor doesn’t act at the Budget. Business rates must be addressed, or venues at the heart of communities will see their rates bills quadruple and find themselves making terrible decisions about whether to shorten hours, close more days, lay off staff, or even shut down for good.”
Nicholls further emphasized that a reduced rate of business taxes for hospitality could avoid this dire outcome and help maintain hospitality’s presence on high streets. She added that measures in the Budget could serve as an investment in local economies, fostering job creation and ensuring the longevity of cherished venues.
