50% Discount on Business Rates for the Hospitality Industry

As part of the support package Rishi Sunak announced in the budget last week, the hospitality and leisure sector has been given another lifeline in the form of a new one year temporary 50% business rates discount for 2022 up to a maximum of £110,000.

This is obviously good news for the sector that has suffered so badly during the pandemic and which, as we have said before, continues to face significant challenges now that previous support measures have largely ended.

We remain concerned that many hospitality businesses are still in a tunnel with little, if any, sign of light at the end and our worry is that this latest support will just mean many business owners keep their heads in the sand and their fingers crossed for a recovery, rather than facing up to the inevitable and accepting there is a need to realign costs with current turnover.

Coupled with other measures, including a reduction in rates on property improvements, Sunak stated that the total cut in business rates will be £7 billion. This is obviously great for businesses but does beg the question how will this be funded? It is difficult to answer this and we fear that additional tax burdens and higher domestic rates are probably on the horizon. If so, we fear these will have a long term impact on household budgets which will inevitably impact household discretionary spend on hospitality and leisure. So it might be that the rates discount next year intended to support the sector could actually cause further problems in the future.

As we have said before, any business has a greater chance of a successful restructuring the earlier the problem is addressed. With this in mind, if any of our contacts are involved with, or knows of anybody in hospitality or leisure businesses that may be struggling, we would urge them to act decisively and seek independent professional advice and that is why we are always available for an initial zero cost assessment which can be arranged by contacting Alistair Dickson.