The whole of Hospitality was watching intently throughout the day to hear news on what hope the Spring Budget 2024 could bring to the Sector. And many were disappointed with Chancellor Jeremy Hunt’s address in the House of Commons yesterday afternoon.
We’re here to give you the rundown on what this announcement means for the hospitality sector as a whole.
The Spring Budget 2024
Many business owners throughout the sector were anticipating a much-needed cut in VAT costs. The UK’s VAT is one of the highest in Europe at 20%. A reduction of 10% would put us in line with the majority of Europe and, many believe, would’ve saved businesses across the sector.
Unfortunately, this was not delivered with the Spring Statement, with no reduction in VAT seen and disappointment throughout the sector
The key announcements made were:
Freeze on Alcohol Duty
The freeze on Alcohol duty is to be extended until February 2025. The previous pausing date was in August of this year, announced in the Chancellors’ Autumn statement. Despite the extension, there has been no real relief from the sector, with no real solution in sight.
Rise in VAT Threshold
The amount small businesses can earn before needing to pay VAT is rising from £85,000 to £90,000. The first time the rate has risen for 7 years. This will indeed help smaller businesses, with Chancellor Hunt stating that this would mean tens of thousands of businesses would no longer have to pay VAT.
Micro and seasonal hospitality businesses will benefit from this, but there is agreement throughout the hospitality sector that a reduction in VAT rate would’ve better helped and promoted growth for the sector.
Cut in National Insurance
National Insurance will be cut by 2%, dropping the tax from 10% to 8%. This cut will hopefully boost consumer spending throughout the year. But with the current cost of living there is no guarantee that these consumers will decide to spend their extra cash at their local pub.
Overall, there weren’t many benefits listed for the hospitality sector in 2024’s Spring Budget. With businesses anxious for what the year holds and many predicting the continuation of pub and restaurant closures that we faced in 2023, many expected more to be done to help the struggling industry. Especially with this feeling like little attention was being paid to the sector, with copy-and-paste announcements from the Autumn statement.
For help managing your finances through this period, get in touch with ETC finance today.
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