Hospitality Leisure & Tourism Budget 2020 Summary

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Yesterday’s Budget announcement took place in an environment beyond comparison with anything we have seen in peace time and possibly in most people’s lifetimes, with concerns about the continuing impact of the COVID-19 pandemic and the ravages of recent extreme weather conditions in some parts of the country still very much an issue for many.

The Hospitality and Tourism sector continues to be significantly affected by the crisis and there were takeaways from the Chancellor’s statement that specifically relate to the sector’s current challenges.

Here’s our summary of the things hospitality, leisure and tourism business owners need to know from the Budget on 11 March 2020.

Coronavirus support:

• Business rates for properties with a rateable value below £51,000 will attract a discount of 100% for hospitality and leisure businesses.  In addition, pubs will receive a £5,000 discount on their business rates for properties with a rateable value below £100,000. Enquiries from businesses on their eligibility should be directed to the relevant local authority.
• Increased support will be provided to businesses that may be affected by Coronavirus. Time to pay arrangements can be setup with HMRC to spread the cash flow effect of VAT and PAYE/NI liabilities - these will be assessed on a case by case basis. The helpline is 0800 0159 559
• Coronavirus Business Interruption Loan Scheme will be ready within weeks to support businesses seeking overdrafts and loans. The Government will provide lenders with a guarantee of 80% of the value which should see lenders relaxing their lending criteria when providing finance to businesses.
• Statutory Sick Pay (SSP) will be payable to employees from day 1 rather than day 4, for those who are unable to work due to Coronavirus or are required to self isolate due to Government guidance.
• Small and medium sized businesses will be able to reclaim up to two week’s of SSP per employee due to Coronavirus. This applies to businesses with up to 250 employees as at 28 February 2020.

Main budget:

• From 6 April 2020, the National Living Wage will increase to £8.21 to £8.72 per hour
• The threshold at which your employees start paying National Insurance contributions has increased from £8,632 to £9,500.
• For self employed business owners, the threshold at which Class 4 National Insurance becomes payable has increased from £8,632 to £9,500. Also, Class 2 National Insurance contributions have increased from £3.00 to £3.05 per week.
• Employment allowance which is an annual reduction/rebate of Employer National Insurance has increased from £3,000 to £4,000 from 6 April 2020.
• Many hospitality business owners make large pension contributions and obtain tax advantages personally or within their company. The tax advantages apply up to a contribution level of £40,000 (the annual allowance). Contributions above this level attract tax charges. The annual allowance for pension contributions is reduced when the individual has earnings above £110,000 – which means higher earners, lose the tax advantages even sooner. In the Budget this threshold has been increased to £200,000. So a full annual allowance for pension contributions will now be available to anyone with earnings up to this amount.
• Entrepreneur’s relief remains in place which means that gains made on the sale of many hospitality businesses will attract an effective capital gains tax rate of 10%. However, this relief is only available for the first £1m of gains received in an individual’s lifetime. This previously applied to the first £10m of gains for any individual.
• Corporation Tax remains at 19%
• Alcohol duty rates on beer, spirits, wine and cider are frozen.