Governmental assistance for Leisure and Hospitality

These include:-

1. Rishi Sunak’s announcement to the House of Commons that the reduced rate of VAT will be extended until 30 September. The VAT rate of 20% was first cut in July 2020 to 5% for food, drink and hospitality – and this will now continue up to 30 September.
2. There will also be an interim rate of 12.5% after September 2021 until April 2022.
3. The business rates holiday has been extended from 31 March to the end of June 2021.
4. In order to offer longer term assistance to the sector, it will be possible to obtain a 2/3rd discount up to £2 million for business rates from July to December 2021 for those businesses which are unable to reopen – but there is a lower cap for businesses which are able to open.
5. There are now “Restart Grants” up to £6,000 per premises.  However, hotels, gyms and hairdressers which open later will be entitled to apply for £18,000 per premises.  
6. There will however be corporation tax at 25% but those businesses which have profits not exceeding £50,000 will be only caught by a new Small Profits Rate of 19% corporation tax rather than the full rate.
7. There is also an extension of the furlough scheme until the beginning of October.
8. Businesses of any size can also obtain loans ranging from £25,000 up to £10 million under a Recovery Loan Scheme which is guaranteed by the Government.

In addition to financial support, since the new Use Classes Order which took effect from 1 October 2020, due to the new Class E, it may be that the leisure and hospitality sector will change from business use to business use without the need for planning consent. As such if the permitted use of the premises falls within Class E such as a restaurant, indoor sport or recreation place, shop etc. you can change to another use within Class E. 

Certainly this gives venues much more flexibility. 
 
In relation to large premises, the Evening Standard reported that Hollywood Bowl is looking to expand and offer more “experiences” to shoppers – not just ten pin bowling.  

We have already seen that many retail areas now contain, amongst other things, drinking venues with crazy golf facilities – particularly in student areas – and it is likely that ski simulators, e-carting, indoor sky diving will start to take over empty retail premises to improve foot fall. Even snooker halls could make a comeback and add to the retail experience.  

Hotel chains in London (including Park Plaza UK, with seven sites across London) confirm that revenue has dropped dramatically (for them - to under £30 per available room in 2020 - from over £100 in 2019 due to lockdowns).  However they report that they are seeing positive signs of recovery for the May Bank Holiday and beyond into the summer.  

Downing Street has stated that the business rates holiday for the most recent financial year cost £11bn – and obviously there will be more costs incurred in the future.  It is however refreshing to hear that some supermarkets have repaid £2bn of business rates and some like Asda have confirmed that it will not take any business rates relief offered.

Most in the sector will feel that this was a good budget from the Chancellor – but there are still concerns as to the effect of Brexit and difficulties in staffing venues – and of course the above assistance is not constant throughout the whole of the industry. 

Much of the support benefits larger business and chains. The Budget doesn’t help small business to pay the huge unpaid back rent that continues to be incurred by tenants to their landlords. This must be addressed.

Furthermore the benefits brought by the Budget don’t apply across the board - so for example the reduced rate of VAT does not benefit gyms and pubs. 

UK Hospitality Chief Executive Kate Nicholls also points out that “Cafes have been severely depleted after a year of closure and restrictions and these grants are a very welcome boost putting the sector in a better place to restart” - but obviously cash is still king.

Many venues will have been closed for long periods of time but have incurred a lot of expenditure in relation to social distancing measures, PPE equipment, contactless payments etc. one can only hope that there will be no further lockdowns from now on and there is a long and warm summer ahead of us.