Spring Budget 2022: Lack of Help for Hospitality
The long-awaited 2022 Spring Budget has now been announced – and with seemingly little-to-no help for the hospitality industry. Without further ado, let’s take a look at some of the key takeaways from Chancellor Rishi Sunak’s statement.
No Vat Cuts for Hospitality
Back in October 2021, UKHospitality launched a campaign (#VATsEnough) calling on Rishi Sunak to permanently freeze VAT at 12.5% after it rose from the temporary 5% reduced rate. Since then, we’ve eagerly awaited a response from the government. But, as many operators expected, there was no reference to this in his speech, therefore it will rise back to 20% in April 2022.
This is very unsettling news for the hospitality industry. Locking VAT at 12.5% would have given companies a major boost as they continue to navigate the challenges posed by the pandemic.
“For many businesses, the removal of the lifeline of a lower rate of VAT might prove fatal. For a heavily, disproportionately taxed sector, a return to 20% dashes the hopes that many businesses could begin to recoup some of the losses of the last two years,” said Kate Nicholls, CEO at UKHospitality.
Tax, Business Rates & Allowances
In April, a 12-month 50% discount on business rates will be available for the hospitality, retail, and leisure sectors, capped at £110,000. On top of that, the employment allowance will rise to £5,000 – a tax cut worth up to £1,000 per company for 500,000 small firms in the UK. The chancellor also revealed plans to cut tax rates on business investment in the Autumn Budget, and will meet with businesses over the summer to discuss how to proceed.
Needless to say, this will be a huge relief for small hospitality organisations that have been battered since the start of the pandemic.
During his statement, Sunak revealed that the government’s plan to increase National Insurance (NI) by 1.25% to support health and social care will remain. In the meantime, the NI threshold will rise by £3,000, up from a planned increase of £300. This means employees will be able to earn £12,570 per annum without paying NI contributions, and has been described as the ‘largest single personal tax cut in a decade’.
The Cost of Living
Inflation is expected to reach a 30-year high of 7.4% later this year as the cost of living crisis continues to bite in the UK. A positive revelation from Sunak is that fuel duty will be reduced by 5p per litre for 12 months, until March 2023 – a cut said to be worth £5bn. This comes after the chancellor promised a ‘stronger, more secure economy’.
Overcome the Challenges With Harri
It’s clear that the hospitality industry has many hurdles to overcome as we recover from the pandemic, with rising costs and staff shortages amongst the most significant concerns. To continue delivering a successful service in these still very uncertain times, you’ll need to manage your operational expenses and retain your employees. That’s where Harri can help.
Our end-to-end workforce management platform enables you to control your costs, streamline communications and offer more flexibility to your teams. This will be the key to retaining employees in 2022. Want to learn more about our technology? Request a FREE demo today!