It’s an anxious time for the hospitality sector, but the recent mini-budget has offered a lifeline, as part of Chancellor Rishi Sunak’s £30bn plan to get the economy back on its feet in the wake of Covid-19.
Hospitality and tourism were amongst the worse hit sectors when the pandemic struck due to months of closure. This has left some previously solvent businesses concerned about their future and how they can adapt to the evolving social distancing rules.
In his budget speech on Wednesday, the chancellor said he wanted to ensure demand was there for businesses as they reopened, so jobs could be protected, and livelihoods saved.
To that end, he has launched two schemes aimed at supporting the more than 100,000 businesses in the UK hospitality sector.
Eat Out to Help Out
The chancellor has made it clear he wants to see restaurants ‘bustling’ once again. Therefore, he is offering to cover 50% of meal costs at venues that take part in a government-backed scheme.
Venues that take part will provide a discount to diners, equivalent to half the cost of meals under £20, although alcoholic drinks won’t be included in the deal – sorry. This offer will be applicable from Monday to Wednesday throughout August.
It’s believed that many large chains are already signing up for the scheme, with the hope that smaller businesses will follow suit.
VAT Quartered for Hospitality and Tourism
Mr. Sunak also announced the much-hoped-for VAT cut for the hospitality and tourism sector, reducing the tax from 20% to 5%. This will continue until January 2021 and will apply to meals out and takeaway food provided by restaurants, alongside the hotel, B&B, and caravan site accommodation. Cinemas, zoos, and theme parks will also benefit from the same tax reduction.
It is hoped the VAT savings will stimulate demand for dining out and other leisure pursuits. For businesses affected this could mean the difference between bringing back furloughed staff and making redundancies. However, some experts believe the VAT cut should have been extended for longer, to bring back industry confidence, arguing the six-month VAT reduction is too short to create any kind of certainty.
Nevertheless, it is not all doom and gloom as businesses find inventive ways to connect to their customers with the UK restaurant takeaway sector growing faster this year than in any other.
Businesses are taking advantage of digital solutions and the change in consumer needs. This may result in businesses requiring smaller premises but equally creating employment opportunities for delivery drivers, marketing or tech experts.
If your business needs are changing you may need to update your terms and conditions, likewise employment contracts. All of which Attwells Home can help with, please call Nick Attwell 01473 229200.