Following the Chancellor’s Autumn Budget 2017 update, Menzies Hospitality & Leisure sector team have reviewed the impact of Philip Hammond’s announcement upon the UK business services community.
Autumn Budget 2017 comments provided by Dave Gosling.
The success of the Hospitality & Leisure sector in the UK is firmly linked to consumer confidence and levels of disposable income, so it was good for the sector to hear that “the government will continue its relentless focus on getting more people into work. Giving them the security and peace of mind of a regular, good quality and well paid wage”. This focus will have a positive impact on the sector and will result in families spending more on hospitality and leisure activities.
In addition to the above there was further positive news for the sector, including;
- Duty levels on alcohol will be frozen
- A change to the annual uplifting of business rates from April 2018 which will be worth £2.8bn to businesses
- Extension of £1,000 discount on rates for pubs with a rateable value of under £100,000 for a further year
- From April 2019, there will be a freeze in short haul air passenger duty rates, which will assist tourism in the UK.
As with any budget, there were changes which would have an adverse effect on the sector, including:
– And increase of 4.4% in National Living Wage from April 2018, with hourly rate going from £7.50 to £7.83 per hour. The sector has seen large increases in payroll costs and this increase further increase costs.
– The chancellor announced a freezing of the indexation allowance for companies selling properties. This will result in higher corporation tax liabilities for businesses which own and sell a property.
– There will be a review of the current VAT registration threshold with a view to reducing the registration limit. If approved, this could have an impact on smaller businesses in the sector.
Overall a positive budget for the sector which should see increases in employment and disposable income. We still have the uncertainty over Brexit and in particular the supply of labour and impact on costs and positive outcomes to these are key for the sector.
Get more input on the Autumn Budget 2017 implications for the Hospitality & Leisure sector by speaking to our sector team.
Find out more about the Menzies Hospitality & Leisure business advisory services.