Budget 2021: Hope & Certainty for Hospitality

The recent announcement of the roadmap for easing lockdown restrictions, along with Wednesday’s Budget speech, have brought much-needed hope and certainty to the hospitality industry.

While we’re only a few months into 2021, the government has already provided some necessary support designed to get the hospitality sector back on its feet. At the same time, it’s clear that there’s ‘no free lunch’ for UK businesses…

Here, we break down the key takeaways – good and bad – from the recent Budget speech.

Extension of furlough

The furlough scheme has provided a vital lifeline for the hospitality industry since it was announced last year. This has fortunately been extended until the end of September. This is particularly crucial for pubs and restaurants that don’t have outdoor areas, or that have to operate at limited capacity until June.


Of course, it isn’t all good news. With the ongoing cost of NI contributions, accrued holiday and cash flow costs, the furlough scheme is actually costing the hospitality industry more than £542m per month. It’s also worth noting that in July employers will have to contribute 10% towards the scheme – increasing to 20% in August and September.

Tax freezes

It’s a relief to see the government has extended 5% VAT until the 30th September, and that it won’t go straight back to the 20% VAT rate. Instead, the government is introducing an interim rate of 12.5% from September until April 2022, though small businesses should note that the VAT threshold will be frozen at £85,000 until 2026.

Rishi also announced that alcohol duties will stay fixed for the second year in a row, which will be welcome news for pubs along with the updates on business rates…

Extended business rates

The business rates holiday originally set to end in April this year has been extended for a further three months. This means 750,000 hospitality, leisure, and retail companies in England won’t have to pay business rates from 1st April until 30th June, when coupled with Small Business Rates Relief.

While this is great news for smaller hospitality organisations, it’s important to remember that the relief is capped at £2 million, meaning larger businesses are unlikely to receive the full benefit.

Grants

If you’re concerned about reopening your hospitality business with lockdown restrictions still in place, you’ll be pleased to hear that the government has announced a £5 billion Restart Grant Scheme aimed at helping to relaunch the struggling sector. Hospitality and leisure businesses can apply for grants of up to £18,000 to help them reopen this summer.

Kickstart Scheme

Following on from the successful Kickstart Scheme, the government has announced an additional £126 million for high-quality work placements and training for 16-24 year olds in England. This means that employers who already provide work experience for trainees will continue to be funded at a rate of £1,000 per trainee.

To see the impact the Kickstart Scheme has had on young people so far, check out our webinar that we hosted last week with Springboard, The Youth Group and D&D London.

National living wage

Of course, supporting young people also means increasing the National Living Wage, which is rising from £8.20 to £8.91 (2.2%) in April 2021. This adds an estimated £350 per year to the wages of those in full-time employment and will include 23-year-old workers for the first time.

Operators will need to make payroll adjustments ready for the increase next month. But with our handy payroll tool, any minimum wage changes are automatically reflected, so Harri clients don’t need to take any action.

Corporation tax increases

Perhaps one of the biggest concerns for the industry is corporation tax increases on the horizon. From April 2023, businesses with profits exceeding £250k will be taxed at a rate of 25%. While this remains the lowest corporate tax rate in the Group of Seven (G7), this rise could cripple many UK operators.

This makes managing your resources effectively all the more important as we head into the next few years. Our intelligent scheduling technology helps hospitality businesses work smarter, not harder, making it easy to organise staffing at busy as well as quiet times.

The future of the hospitality industry

With tax cuts and grants on the horizon, and the restaurant sector expected to grow by a third in 2021, the future is looking a lot more promising than it was even just a few months ago. However, long-term sustainability will still be top of the agenda for most operators in the sector.

After being closed for so long it’s important to make sure your reopening runs smoothly – so you need a digitised platform that can help with everything from hiring and onboarding, to scheduling and team communications. Harri can do just that and give you the flexibility and the resources you need, freeing up your time to concentrate on the important things like your people and their futures.

Want to learn more about our software? Simply head to our homepage, request a demo, and our expert team will be in touch as soon as possible.

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