Rates, VAT and furlough dominate Budget

Rishi Sunak has extended the business rates holiday and the 5% reduced rate of VAT in his Budget presented on 3 March.

In a Budget that was watched by millions across the hospitality industry, the chancellor revealed that the government will continue with the 100% business rates holiday through to the end of June. For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses.

While the rates holiday is welcome, many have been quick to point out that a number of pubs and bars won't be able to open until 21 June under the current reopening schedule. 

"Many in hospitality will not be open before 21 June and so this remains a challenge unless government helps with route map out of rent debt," tweeted Kate Nicholls, CEO of UKHospitality. 

Despite Sunak not addressing the topic of hospitality rents - perhaps due to his widely criticised appearance on the Andrew Marr Show - he did announce that the 5% reduced rate of VAT will be extended for six months to 30 September. There will then be an interim rate of 12.5% for another six months.

The Budget confirmed the extension of the furlough scheme, which will also continue until the end of September. The chancellor then talked about the new restart grants available to hospitality operators, who are eligible for up to £18,000 per site, as reported here.

Pub and bar businesses will also note that the government is doubling the apprentice incentive payments it gives businesses to £3,000 for all new hires of any age. 

Other points for pubs and bars

Sunak began his speech by outlining that the Office for Budget Responsibility is forecasting a swifter and more sustained economic recovery from Covid-19 than expected, with the economy returning to pre-Covid levels by middle of next year. Six months earlier than previously thought.

In other Budget points, consumers/operators will now benefit from the more than doubling legal limit for single contactless payments, which is increasing from £45 to £100.

With regard to the drinks behind the bar, alcohol duties will be frozen across the board for the second year running.

A £150m Community Ownership Fund will also be introduced, allowing communities across the UK to invest in and protect the assets that matter most to them, including pubs. 

Finally, beginning in April 2021, a new 'super-deduction' initiative will cut companies’ tax bill by 25p for every pound they invest in new equipment, something operators will no doubt investigate with intrigue as refurbishments and improvements take place in the build-up to reopening.