- November 13, 2021
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REVIEW: The Cumberland Building Society looked at some major talking points
A CUMBRIAN building society has put some of last week’s Budget changes in a business context.
The recent Budget announcement saw the Chancellor, Rishi Sunak, announce some new changes which will affect hospitality and leisure businesses.
The Cumberland Building Society has spoken to businesses to see how they feel about it.
The chancellor unveiled a new 50% business rates discount for businesses within the hospitality industry for the next financial year – April 2022 to March 2023.
Jackie Kirsopp is a Chartered Accountant at Dodd & Co, based in Carlisle.
She said: “The extension of the business rates relief is very positive news for the British hospitality sector, which has been under considerable pressure in recent times.
“It is certainly a silver lining for businesses when taking into account other impacts that are coming next Spring, such as the national living wage increase, additional national insurance contributions of 1.25% and the temporary VAT rate increasing back to 20%.”
There were also other announcements which will affect those working in the hospitality and leisure sector, including the 6.6% increase in the national living wage to £9.50 per hour. In real terms, this represents a rise of £1,074 extra a year before tax for those working full-time and is one of the most significant increases.
However, what wasn’t included in the Budget was the much-anticipated extension to VAT of the current 12.5% rate for hospitality businesses as it was announced that this will most likely return to 20% in April of next year.
The Chancellor also announced a reform of alcohol duty from February 2023 to create a system that, as Mr Sunak put it, is “simpler, fairer and healthier”.
This includes the largest cut to beer duty for 50 years, with duty on draught beer and cider served from containers of 40 litres cut by 5%.
Ms Kirsopp shared her perspective on this change with us: “This is another positive worth noting, especially for the pub industry. The future reduction in duty on draught beer and cider may start to level the playing field slightly between retail and pubs.”
How will the changes affect the hospitality industry from April 2022?
Ms Kirsopp said: “Overall, the 100% business rates improvement relief for 12 months is very welcome news and we have some clients who will benefit from this as they look to refurbish or extend their hospitality properties, and therefore make them even more appealing to their customer base.”
“Additionally, capital gains tax rates didn’t increase, and this is a positive within a moving market where we are looking for new entrants to the hospitality market to keep it buoyant.”
Scott McKerracher, Head of Commercial at The Cumberland added: “It’s encouraging to see some positive changes coming next year which will hopefully be beneficial to our customers and the wider hospitality tourism sector in Cumbria and across the whole of the UK. ”
The Cumberland also supports the hospitality industry in Cumbria with its long-established lending team dedicated to holiday accommodation owners.
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