‘Permanent tax relief would encourage sector investment’

01-Jul-2022 - Last updated on 01-Jul-2022 at 08:05 GMT

Cash strapped: many hospitality businesses aren't able to invest due to the current economic headwinds (image: Getty/Guido Mieth)

The Government has been urged to introduce a permanent tax relief, which could encourage investment by businesses, one trade body has stated.

The British Beer & Pub Association (BBPA) has responded to the Government’s consultation on capital allowances and supported calls by other trade bodies to introduce a permanent 100% deduction for investment in capital allowance.

This followed research that found less than a third (28%) of hospitality firms are currently considering investment due to the challenging economic climate.

The insight from the BBPA, the British Institute of Innkeeping (BII) and UKHospitality also revealed the profitability of hospitality companies has dropped with just 37% currently turning a profit.

Extremely worrying

A joint statement from the trio of trade bodies labelled the figures as “extremely worrying and demonstrate the critical situation hospitality businesses across the country are currently in”.

They added: “Given the chance, our industry has huge growth potential and the ability to play a critical role in the levelling up of communities in every single part of the UK but instead, we are still struggling to get back on our feet properly after a turbulent two years.”

The introduction of tax relief would replace the super deduction currently in place. It would including a ‘full expensing’ system, meaning firms could immediately deduct qualifying investments from their taxes instead of spreading that deduction over time.

Furthermore, the BBPA stated any adjustment to capital allowance tax should sit alongside a review to planning processes.

Sector being held back

It claimed the long application and approval processes currently act as a major blocker to many pub companies investing in their estates.

BBPA chief executive Emma McClarkin said: “We find ourselves in a position as a sector where we are keen to get back to business, provide the best service and experiences for our customers and thrive at the heart of communities across the country but we are being held back by a lack of incentives to invest.

“Our pubs and breweries need to feel confident to spend their money, especially after the past two years and a permanent deduction would go some way to providing assurance and allow them to make investments to upgrade their venues, take on new properties and ultimately grow their businesses.”