Hospitality industry gives muted reaction to business rate reprieve

01 April 2009
Hospitality industry gives muted reaction to business rate reprieve

The hospitality industry has given a muted reaction to the chancellor's 11th hour climbdown on the decision to raise business rates by 5%.

But, in the House of Commons last night, Alastair Darling told MPs that businesses need only pay 2% more this year and could spread the remaining 3% increase over the next two years.

The move followed a concerted campaign led by the retail sector, which highlighted the unfairness of the 5% rise, given that it was based on last September's inflation rate.

Business rates paid by hotels are based on around 4-5% of turnover, which currently works out between £480m and £600m (official overall turnover is £12b), and adding 5% in April would have meant an extra £24m-£30m for the sector. Restaurants would also have faced a "significant" rise in costs, experts warned.

Jeremy Hill, director at property agent Christie & Co, said: "We welcome this last-minute move by the Government to back down on what could have been a crippling increase in business rates for small businesses during what is already a very challenging climate.

"However, due to the last-minute nature of this decision, many small businesses will be left with more red tape in order to agree revised payment plans with their local councils."

The British Hospitality Association was also cautious. A spokesman said: "The concession will help the cash flow problem but it only defers the additional payment to future years.

"What we were wanting was the increase to be abandoned altogether in a time of such recession, which the Government has refused."

Business rate rise will add millions to hospitality tax bill >>

Welsh rateable value relief row >>

Hotel insolvencies double; worse to come >>

Restaurant sector hit hardest by UK recession >>

By Daniel Thomas

E-mail your comments to Daniel Thomas here. jobs
Looking for a new job? Find your next restaurant job here with jobs

[Newsletters For the latest hospitality news, sign up for our e-mail newsletters.
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking