Warning that £864m hospitality business rates bill would be ‘final nail in the coffin'

18 October 2023 by
Warning that £864m hospitality business rates bill would be ‘final nail in the coffin'

The hospitality industry could be faced with an "insurmountable" £864m business rates bill next April, UKHospitality has warned.

Business rates increase in line with inflation based on the Consumer Price Index for the previous September, which stood at 6.7%, according to the latest figures from the Office for National Statistics (ONS).

The trade body calculated the planned inflation-linked rise in April will amount to an additional £234m, while the ending of rates relief for the financial year 2023/24 would represent £630m.

It has therefore urged the Chancellor to freeze the business rates multiplier and maintain the business rates relief for hospitality, which has amounted to up to £110,000 per business for each billing year.

Jeremy Hunt extended business rates relief for those in the hospitality, retail and leisure sectors and froze the business rates multiplier for a year in last year's Autumn Statement.

UKHospitality has encouraged businesses to write letters to their MPs to stress the need for action ahead of the Autumn Statement, which has been scheduled for 22 November.

Kate Nicholls, chief executive of UKHospitality, said: "Today's figures finally confirm the bleak picture facing hospitality businesses next April. Almost a billion pounds in extra costs from business rates alone is unfathomable – and insurmountable – for many.

"Such dramatic cost increases would undoubtedly be the final nail in the coffin for many businesses. It would be particularly perilous for small, independent businesses, for which ongoing relief measures are a lifeline at a challenging time."

She added: "It's imperative that the Chancellor takes clear action at the Autumn Statement to extend the current relief measures for a further year to protect the vital community assets that make up the UK's vibrant hospitality sector."

Real estate firm Colliers calculated businesses will be expected to pay an extra £1.74b in rates bills in April 2024 without government intervention.

The office sector is also expected to be hit with an extra £401m in its total rates bill, with Barclays in London's Canary Wharf, for example, likely to see rates increasing from £9.1m this year to £9.8m in April.

John Webber, head of business rates at Colliers, told The Caterer: "When the retail relief comes to an end, this will affect the hospitality sector too. If the UBR isn't frozen and the rates liability does go up by 6.7%, the impact for businesses in this sector will be huge."

"In terms of foodservice companies that cater to offices, they will have already been impacted with fewer people being in the office on a regular basis, resulting in less demand for their services. Any further costs, such as increased business rates, for both the businesses themselves and the companies they cater for, will just add more cost to the bottom line, in an already difficult economic climate."

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