Chancellor Rachel Reeves’ recent announcements in the autumn budget bring a mix of outcomes for businesses in the retail, hospitality, and leisure (RHL) sectors. While pubs may benefit from reduced duty rates on draught alcohol, many other businesses are likely to feel the pressure from rising wages and increased employers’ National Insurance contributions.
Amanda French, a partner and head of retail and leisure at national law firm Clarke Willmott LLP, said: “The majority of our clients will be left considering the significant impact of the National Insurance contributions (NIC) increase, the decreased NIC threshold, and the increases to the National Living Wage and National Minimum Wage. For an industry with a large number of part-time lower-paid employees, the changes to the NIC result in them paying NICs on earnings above £5,000, representing a cost of no less than £615 per employee, in addition to the increased wage costs.
“In addition, the current temporary 75% business rate discount for retail, hospitality and leisure businesses, available since 2020/21, will be replaced with a less beneficial 40% discount, up to a cash cap of £110,000 per business for 2025/26.
“For some businesses they will see their business rates nearly double on some properties next year and this may be unsustainable. Albeit it has been confirmed that the temporary nature of this discount, reviewed on an annual basis, will cease and will become permanent in April 2026.
“Good news came in the form of a cut to draught alcohol duty, although alcohol duty rates on non-draught products will increase in line with RPI from February next year.”
Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and is this year celebrating its 135th anniversary.
