While the mini-budget, referred to as the UK Growth Plan, announced on Friday, 23 September 2022, by the Chancellor of the Exchequer, Kwasi Kwarteng, does provide some support to the hospitality sector, with a freeze on alcohol duty, a reduction in employment taxes and cap on energy costs, the government has missed a key opportunity to cut VAT for hospitality. It has also missed the opportunity to provide a business rates holiday that could have been instrumental in supporting growth, jobs and profitability for the sector.
Here are some of the key announcements:
- Income Tax: The basic rate of Income Tax will be cut from 20% to 19% from April 2023
- National Insurance: From 6th November the government is cutting National Insurance by 1.25%
- Corporation Tax: The planned Corporation Tax increase to 25% has been cancelled. The rate will stay at 19% to support business investment and help economic growth
- Energy: From 1 October, the typical UK household can expect to pay no more than £2,500 a year on their energy bills. An energy bill relief scheme will reduce wholesale energy costs for UK businesses
- VAT-free shopping: The Government will introduce VAT-free shopping for tourists
- Investment zones: 38 areas of England earmarked as low tax ‘investment zones’
- Alcohol duties: The government is abolishing a proposed increase in duty rates for beer, cider, spirits and wine, a move widely welcomed by the industry
- Business regulation: A scrapping of the 2017 and 2021 reforms to the IR35 off-payroll working rules. Kwarteng also says the government will bring forward measures to streamline regulations and remove EU-derived laws.
- Investment: The annual investment allowance, which gives 100% tax relief on investments in plant and machinery, will not fall to £200,000 as planned. Instead it will remain at £1 million. And VCTs, EIS and SEIS will be extended beyond 2025
Marcus Jones, Managing Director at Capcon, comments: “We continue to recognise the challenges that the Hospitality industry is facing and, whilst these reductions in cost are welcomed, this simply won’t be enough for some businesses.
“We do however remain grateful to UKHospitality, who will continue to review the details on the policy proposals and lobby for further support for the industry this winter.
“Please get in touch with us if you would like to discuss how we may be able to assist you and your teams.”