The inflationary surge and wider market forces including growing supply chain pressures, reduced commuter numbers and depressed foreign travel are heaping more pressure on leisure and hospitality businesses up and down the country. As the storm clouds gather, RSM UK sets out 5 ways in which the UK government could (and should) help support a sector that faces an autumn and winter of discontent, potentially more challenging than lockdown #2 in winter 2020/21.
1. Business rates relief – retail, hospitality and leisure relief replaced the retail discount on 1 April 2022 to reduce pressure on high street businesses and encourage consumer spending. However, the criterion for eligibility needs urgently reviewing to ensure a greater volume of sound businesses are protected.
2. VAT holiday – a further tax relief in the form of a reintroduction of the temporary reduced rate of VAT would also go some way in supporting VAT registered businesses.
3. Easing immigration restrictions – reviewing the current regulations that restrict the ability of foreign workers to enter the UK and work within the sector should be reviewed to ensure that the widespread job vacancies that are hampering businesses can be filled to meet consumer demand.
4. Restricting Coronavirus Business Interruption Loan Scheme (CIBLS) repayment liabilities – with many businesses now obligated to repay their CIBLS liabilities and reports of widespread defaults on those payments, we would encourage government to legislate loan repayment holidays or ensure a greater level of flexibility over the coming months.
5. Energy price cap – an introduction of an electricity and gas price cap to set the maximum figure that can be charged to businesses on a variable rate for a six-month period over the winter period.
Paul Newman, head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said:
‘There are huge challenges ahead for the leisure and hospitality sector. The government’s support throughout the pandemic was critical in saving many businesses. But it could all be for nothing if measures are not reintroduced at pace in the coming months. A new Prime Minister could bring about meaningful reforms to the way businesses are taxed. An improved business rates system for example, would be an obvious way for new leadership to bring back the UK’s thriving highstreets and encourage consumer spending