Hospitality welcomes NI reverse
The change, which will save hospitality firms an average £9,600 a year, will take effect from 6 November and comes hot on the heels of the Government's announcement that it will provide a discount on wholesale gas and electricity prices for all non-domestic customers for at least six months.
“Cutting employer NI contributions (NICs) is more excellent news for the hospitality sector, and will help businesses reduce their costs as they attempt to return to profitability while facing a perfect storm of financial pressures, including the interest rate rise, VAT back to 20%, and the frankly unfair business rates regime,” says Kate Nicholls, chief executive of UKHospitality.
“Cutting employee NICs is a great way to ensure people keep more of their money, primarily so that they’re able to pay their bills, and then to enjoy affordable luxuries, such as visiting hospitality venues.
“This announcement is particularly welcome, as UKHospitality has long campaigned for an employer NICs regime that supports job creation, which this move will certainly help towards.”
Chancellor Kwarteng is set to unveil full details of his mini-budget at 9:30am this morning, with a wave of tax cuts expected in a bid to boost the economy amid spiralling inflation and energy costs.
Ahead of the fiscal statement, hospitality leaders and trade bodies have been urging further Government support for the industry through a VAT rate cut and the reform of business rates.
Prime Minister Liz Truss has previously hinted that hospitality would, as a 'vulnerable' sector, receive further support beyond the initial six-month period.
Kwarteng's intervention comes after the Bank of England (BoE) raised interest rates by 0.5% yesterday (22 September), pushing rates to 2.25%, their highest level since November 2008.
Nicholls says the rise, while widely expected, has a two-pronged negative impact on the hospitality sector.
“It will simultaneously diminish discretionary spend for consumers while making borrowing more expensive, exacerbating the already challenging trading environment for our businesses.
“This underlines the acute need for further support for the industry, in the form of business rates reliefs and reduced rates of VAT to spur recovery in a vital sector upon which millions of jobs depend.”
