Philip Hammond MP, the Chancellor of the Exchequer, has delivered the second Budget today. A number of factors announced will impact on the Hospitality Sector,  the areas of impact  initially noted in the industry are:

Excise duty

• A Freeze on duty for beer, wine, Cider and spirits – an estimated saving of around £115m to hospitality businesses.
• White cider – legislation to create a new tax band from 6.9% to 7.5% from April 2019.

Business rates

• CPI rather than RPI for multiplier increase – 3.9% increase rather than 3%, estimated to save around £75 million for the eating and drinking out sector.
• Support pubs by The extension of  £1,000 relief for another year for pubs.
• Revaluations on Business Rates will take place every three years – plans for consultation on how this will work in the Spring.
• 100% business rates retention to be trialled in London next year.

VAT

• The VAT threshold will be maintained at £85,000 for the next two years – further consultation will take place  on how it could be amended to promote growth.
• A review of VAT and APD on Northern Ireland tourism industry, reporting back at next year’s Budget.

National Living and Minimum Wages and Personal Tax allowances

• The National Living Wage increasing to £7.83 (from £7.50) from April 2018.
• Recommendations implemented  on NMW – to £7.38 (£7.05) for 21-24 year olds; £5.90 (£5.60) for 18-20; £4.20 for 16 and 17 years; and apprenticeship rate to £3.70.
• Personal threshold rises to £11,850 for no taxation, and to £46,300 for the next band.

Both the freeze on duty and the assistance for pubs in relation to rate relief should be well received.  Some areas will effect costs for operators ( such as the National Living Wage ) but may of course be offset by people having more money free to spend back into the sector itself with the Personal Tax allowances and the NLW itself.

Industry bodies including the AMLR (Association of Licensed Multiple Retailers)  felt a number of positives could be taken from the announcements, Chief Executive Kate Nicholls  stated;

“At a time of rising costs, a freeze in the beer duty and a continuation of support for pubs on business rates is very welcome” adding ” this positive action will help tackle rising costs, saving the sector around £116 million, as well as underpinning consumer confidence.“

The British Institute of Innkeeping welcomed further support for pubs on business rates, BII Chief Executive Mike Clist;

“We welcome the fact that Government has listened to the call to help pubs in what is a very competitive marketplace.  Moving the annual inflation of rateable values from RPI to CPI, continuing the £1,000 rate relief policy for a further year and moving the revaluation of properties to 3 yearly will all help.

“We do however still believe the rating system needs a complete overhaul and we will continue to lobby for this. No increases in drinks duty will hopefully encourage customers to continue to use our great British pubs.”

Should you wish to consider the full budget papers (in more detail) they are available here.