Business rates
In October’s Budget, Labour Chancellor Rachel Reeves indicated changes to business rates, national insurance contributions and wages.
From the 1 April 2025, the relief on bills is set to be 40% which is up to a £110,000 cash cap.
Drastically different from the current 75% business rates relief discount, which is set to end on 30 March of this year.
According to commercial real estate intelligence firm Altus Group, the reduction in business rates will also result in an average 140% rise in business rates for bills for more than 250,000 high street premises throughout England next April.
The average business rates bill for pubs will also increase from £3,938 to £9,451 with restaurants seeing average bills rising from £5,051 to £12,122.
National insurance
The rate of employer national insurance contributions is also set to increase from 13.8% to 15%, which is up by 1.2 percentage points.
Additionally, the per-employee threshold has also been cut by 45% from £9,100 to £5,000 per year. This is set to apply from 6 April 2025.
UKHospitality chief executive, Kate Nicholls previously stated: “An increase would partially hammer sectors like hospitality.”
She also described the hikes as “well above expectations.” The Chancellor also stated the new raise is expected to be up to £25bn a year, a decision she described as “a difficult choice” one which she claims, is not taken lightly.
This significant raise could dangerously impact smaller businesses within hospitality, according to night time economy adviser Sacha Lord. He said: “businesses cannot absorb rising costs with such small margins and still be viable.”
Wage rises
National living wage will similarly increase for those aged 21 and over by 6.7% from April 2025 to £21.1 from £11.44 per hour.
This will take place as a result of the Government accepting the low pay commission’s recommendation. Alongside this, the national minimum wage for those aged between 18-20 is also set to increase by 16% from £8.60 to up to £10 an hour from April this year.
Wage rates for under 18s are also expected to rise by 18%, which is up from £6.40 to £7.55 in April of this year, with the same rates applied to apprentice wages.
Alcohol duty
Alcohol tax on draught products will be reduced by 1.7%. Alcohol duty on non-draught products will also increase due to retail price index inflation.
Unlike the aforementioned subjects, these changes will come into effect earlier on this year, from 1 February 2025.
Alcohol tax on draught products will also increase the value of the draught relief duty differential from 9.2% to 13.9% for both qualifying beer and cider products.
The Chancellor previously stated, “For draught, I am cutting draught duty by 1.75%, which means a penny off the pint price in the pub”
The Society of Independent Brewers & Associates (SIBA) CEO Andy Slee said: “The Chancellor’s announcement that she will raise the draught duty discount was a positive step...
But with broader alcohol duty, business rates, wages and national insurance contributions all going up pubs and breweries are going to be worse overall.”
Young’s CEO Simon Dodd, also emphasised he was pleased the Government had taken the decision to cut draft duty, however amidst the other announcements made “there are many more snakes and ladders for the hospitality sector, a vital industry for the communities we serve and the country’s economy as a whole.”
Identification changes
Recently revealed on Saturday 21 December, new legislation allowing customers to use digital IDS in order to purchase alcohol in pubs, clubs and shops is set to be introduced this year. The plans were set in motion following a consultation into updating the Licensing Act 2003.
The new switch to digital identification could allow for shorter wait times within bars and clubs and increased economic growth as a result, the Government have said.
UKHospitality (UKH) chief executive Kate Nicholls said: “Digital ID can make life easier for both consumers and businesses, and we’re pleased to be supporting its introduction.”
Martyn’s Law
Although no current updates to Martyn’s law, The Terrorism (Protection of Premises) Bill, was introduced to Parliament on 12 September 2024 and has since been undergoing parliamentary scrutiny.
The bill may come into force within the next two or three years, and will outline requirements for hospitality sites and events in order to increase their preparedness for and protection from terrorist attacks.
