An uninspiring Spring budget for Hospitality & Leisure businesses as the Chancellor fails to deliver support for the sector.
Extended freeze on alcohol duty
The extended freeze on alcohol duty was a modest, but welcome announcement, although it was disappointing that there were no proposed changes to business rates or business energy bills. With the standard business rates multiplier set to increase by 6.7% on 1 April 2024, many H&L businesses will see their operational costs rise at a time when there is already very little headroom.
2% Employee national insurance cut
The 2p cut in employee national insurance and the proposed childcare changes may go some way to getting more people back into the workforce and easing labour shortages, however a reduction in the employer rate would have been welcomed to reduce employer wage costs. The H&L sector had been lobbying for a reduction in the VAT rate but instead saw a modest increase in the VAT threshold from £85k to £90k which will do little to reduce the sectors tax burden, or boost consumer spending.
Furnished Holiday Let Relief abolished
From a travel and tourism perspective, the scrapping of Furnished Holiday Let Relief, designed to target Airbnb style lettings and free up housing stock, may reduce the availability of holiday lets and impact local British tourism and its associated jobs, predominantly in the Hospitality and Leisure sector. Air Passenger Duty will also increase on all non-economy tickets this year, which some argue may make the UK aviation sector uncompetitive and reduce passenger numbers. Whilst many had hoped for the reinstatement of ‘tax free shopping’ this did not materialise but the Chancellor did announce that the Museums & Galleries Exhibition Tax Relief (MGETR) would be made permeant, helping to support the UK’s creative sector in attracting international visitors and serving local communities.