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Industry leaders have been calling for a VAT cut to help the struggling industry, which has been hit by rising energy and raw material prices, rising staff costs and falling consumer spending.
Rare Restaurant chief executive Martin Williams described the chancellor’s announcement as a “budget empty in terms of ideas and support for the hospitality industry”.
“Today’s budget is the Conservatives’ last chance to support the hospitality sector for the first time since the pandemic, by lowering restaurant VAT to 12.5% and capping business rate increases by hearing from more than 100 hospitality leaders.”
“Sadly, Prime Minister Hunt has once again neglected our industry, which employs over 3 million people and is a vital part of our society, and has failed to provide any meaningful support.”
Ahead of the Budget, the Gaucho restaurant chain, owned by Rare Hotels, announced it would remove VAT from all lunch bills every Friday until the end of the month.
“This government has got to be the most anti-business Conservative government in history,” Loungers co-founder Alex Reilley said in response to Mr Hunt’s budget on social media site X.
Business rate hike
Following the budget announcement, commercial property intelligence company Altus Group highlighted that 219,410 properties in England now face a £166m increase in business rates from 1 April 2024/25.
“At an effective tax rate of 54.6%, an increase of 6.7% would mean that businesses in April will face the largest year-on-year increase in the standard multiplier since 1991, although overall UK inflation will be below target” Alex, President of Property Tax at Altus Group Probyn said: “The tax rate will reach 2% in the next few months. “
“This fails to encourage investment and boost economic growth, especially after two consecutive quarters of GDP contraction.”
Isabelle Shepherd, Head of the Hospitality Team at Haysmacintyre Accountants Government freezes alcohol taxesBut said the budget provided “cold comfort” to the hospitality industry, which needs urgent support to prevent further closures in the near future.
“In other ways, today’s budget will be cold comfort for an industry that has faced an ongoing battle on multiple fronts since the start of the pandemic,” she said.
“Now, with operating costs at an all-time high and government support reduced post-pandemic, hospitality has been left out of the chancellor’s budget.
“Coupled with the challenges the industry faces in terms of recruitment, it is not surprising that businesses are buckling under the pressure. The hotel industry urgently needs government intervention to reduce the VAT and business tax burden; otherwise we will see over the next few months More casualties. Unfortunately we are still waiting for post-budget support.”
No tax-free shopping plan
The travel industry association has criticized Mr Hunt for his reluctance to implement a duty-free shopping scheme for British tourists.
“We applaud the cuts to National Insurance and the freeze on fuel and alcohol duties, which will have a positive impact on many workers in the UK tourism industry, but the lack of a new fiscally positive tax-free shopping scheme will be a huge missed opportunity, UKinbound Chief executive Joss Croft said: “Spurring economic growth and delivering much-needed additional export revenue to the UK. ”
“This is a shame because competition in the international tourism industry is fierce and with the right policies in place this industry can quickly deliver incredible growth for UK companies in both the short and long term.”
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