Chancellor of the Exchequer Jeremy Hunt is planning to extend tax breaks for the hospitality sector and small businesses in his autumn fiscal statement next week as part of efforts to boost economic growth.
Britain’s finance minister is considering prolonging a 75% reduction in business rates bills for hospitality firms that would otherwise expire next year, according to people familiar with the matter. He’s also considering extending a protection that caps any increase in the business rates bills of small companies at £600 ($745), said one of the people, who requested anonymity because the proposals haven’t been finalized.
The Treasury didn’t immediately respond to a request for comment.
The chancellor is under pressure from within the ruling Conservative Party to use next week’s fiscal statement to cut taxes and spur growth while avoiding spurring inflation. The Autumn Statement represents one of the few remaining set-piece moments before a general election for the Tories to try to close a 20-point poll gap behind the opposition Labour Party.
The hospitality and SME measures are expected to come alongside an extension of the so-called full-expensing policy — a 100% tax relief on capital spending — to encourage investment.
Other options being considered to help small firms include raising the threshold at which they start to pay value-added tax, one of the people familiar said. Hunt is due to make final decisions on his plans after he’s received latest fiscal forecasts from the Office for Budget Responsibility on Friday.
The 75% business rates relief for retail, leisure and hospitality sectors was introduced last year to help those recover from the Covid-19 pandemic. Hunt was set to let the relief expire for bigger retailers, but wants to keep supporting hospitality, according to the people.
“Freezing rates and extending relief will be a lifeline for a sector that simply cannot absorb any more costs,” said Kate Nicholls, chief executive of UKHospitality, a lobby group. “Inaction will leave hospitality businesses with no choice but to put up prices, open less, or in the worst-case scenario, shut their doors for good.”
--With assistance from Philip Aldrick.