April is a big time for business rates. New business rates bills are arriving on doorsteps anytime now, and the spring budget announcements shed new light on future economic plans.
Many businesses are beginning to receive their new rates bills already. But one sector in particular may be feeling a particularly hard squeeze, now that some business rates relief changes have come into effect.
Hospitality and leisure were issued a lifeline from the start of the pandemic in the form of 100% relief on their business rates. This was the right decision to make considering the complete freeze in trade for these businesses. It allowed many venues to just about weather the storm, when forced to close their doors to the public.
But, as lockdowns were lifted and many venues started to gear up for a return to a new form of normal, business rates made a return. Even when re-introduced at 60% of the usual amount, this was still a big blow to an industry that had used up most of its cash reserves through two years of lockdown.
This year's spring budget announcement takes reductions one step further, slashing 10% off the discount that the hospitality industry receives. The new budget also announced a plan to move forward with a VAT increase on food and drink from 12.5% to 20%, which could prove fatal to many businesses in the industry.
The retail, hospitality and leisure sectors have seen their support halved from £5.76b during 2021/22, to £2.66b for 2022/23. The VAT increase see’s their overheads rise, costing high street businesses an extra £3.1b in tax.
This is a time where the leisure industry should be given all the support it needs to succeed. But instead, it’s being made harder to operate. For an industry that provides jobs to 930,000 people who are already feeling the pinch of the cost of living crisis, safeguarding this industry's wellbeing should be a government priority.
We’ve been calling for a business rates reform for a long time now, and we’re disappointed not to see any improvement on the system announced in the spring budget. The lack of additional support leaves the onus of business rate reduction very much on the individual. Plus, the system itself requires niche knowledge and a lot of time and energy to achieve a result. Many business owners may have even been paying too much on their business rates since the start of this rating period in 2017. They now have less than a year to create an appeal before losing out what they’ve overpaid.
Business rates might not have been a top priority when 100% relief was available. However, now support has dwindled and the emergency fund is empty for many, we recommend exploring a business rates review while there’s still time. Achieving a saving will not only secure you a rebate for overpayment since 2017, but also reduce your business rates moving forward. In effect, a robust business rates review could help top up any savings lost through the pandemic, and make further relief cuts down the line less painful.
We’re working with our clients in the leisure and hospitality industries to ensure their rates are as low as possible in preparation for the new bill. If you need business rates advice, we’d love to help.