The hospitality, retail, and leisure sector faces several significant changes due to the Autumn Budget 2024, particularly after a period of increased costs and a cooling post-Covid boom. Here’s how these changes are expected to impact the sector:

1. Payroll Changes Related to the Budget:

• National Minimum Wage Adjustments: The Autumn Budget 2024 has announced significant increases in the National Living Wage and the National Minimum Wage for various age groups, set to take effect in April 2025. These adjustments are aimed at improving the earnings of low-paid workers across the country.

For the hospitality, retail, and leisure sectors, where wage bills typically comprise a large portion of operational expenses, these increases represent a considerable financial pressure. As wages rise, businesses in these sectors may face challenges in managing their labour costs effectively, impacting their overall financial stability.

Advice from Alex Nicholl, Payroll Director, BM Connect: “With the upcoming increases in the National Minimum and Living Wages, businesses in the hospitality and leisure sectors need to be proactive in adjusting their financial and operational strategies. This is not just about compliance; it’s about strategically aligning payroll practices to sustain business growth despite increased labour costs. BM Connect can provide tailored support to streamline your payroll processes, ensuring that adjustments are not only compliant but also strategically optimised to support your business’s financial health and growth objectives.”

• Employer National Insurance Contributions (NICs): Starting April 2028, NIC thresholds will be indexed with inflation, and the rate for employers’ NICs will increase from 13.8% to 15% in April 2025. This adjustment necessitates careful payroll planning to manage the increased cost of employment.
• Integration of Benefits in Kind into Payroll Software: Effective April 2026, businesses must integrate the reporting of all benefits in kind into their payroll software systems. This change mandates accurate, real-time recording and reporting of all benefits, which will not only streamline payroll processes but also ensure compliance with updated tax regulations.

Further Advice from Alex Nicholl: “Adapting to these payroll changes requires a comprehensive approach. From re-evaluating staffing needs to optimising payroll systems for accurate benefit reporting – each step should be handled with precision to mitigate financial strain. At BM Connect, we’re equipped to guide businesses through these transitions, ensuring that your payroll operations are efficient, compliant, and aligned with your business objectives.”

These developments in wage regulations necessitate a robust response from businesses in the affected sectors to ensure they not only comply with the new laws but also strategically leverage these adjustments for long-term benefit. With expert support from BM Connect, businesses can navigate these changes effectively, maintaining financial health and competitive advantage in their respective markets.

2. Furnished Holiday Letting Regime Changes:

• From April 2025, the existing tax benefits associated with furnished holiday lettings will be removed.

This change will increase the tax burden on businesses operating holiday lets, potentially affecting profitability and cash flow.

Advice from Mariske Byrnes, MD, BM Connect: “The upcoming changes to the furnished holiday letting tax benefits mean that businesses need to prepare for increased tax liabilities. Together with our partner company Beavis Morgan, we can assist in adjusting financial strategies to accommodate these changes, ensuring businesses remain financially healthy.”

4. Stamp Duty Land Tax (SDLT) Increase:

• The higher rate of SDLT for additional dwellings will increase from 3% to 5% starting from 31 October 2024.

This increase will affect those in the hospitality sector who are expanding their property portfolios, making property acquisitions more costly.

Advice from Mariske: “In light of the SDLT increase, our clients in the hospitality sector should consider advancing their property acquisitions or restructuring their investment strategies to mitigate the impact of these higher costs. Talk to us about how we can assist.”

5. Business Rates Relief Adjustments:

• For the financial year 2025-26, businesses in these sectors will receive a 40% business rates relief, a reduction from the current 75% relief. From 2026, rates will be calculated using “permanently lower multipliers,” though the specifics of these multipliers have not been detailed.

While there is some relief, the reduction from 75% to 40% in 2025-26 will increase operational costs for many businesses. The long-term impact of the new multipliers starting in 2026 remains to be fully understood.

Advice from Mariske: “Businesses should plan for increased operational costs due to reduced rates relief and explore strategies to enhance efficiency. BM Connect’s management reporting services can provide crucial insights for making informed decisions that align with these new financial realities.”

6. Discussion on Future of Business Rates:

• The government has initiated discussions on the future structure of business rates and is seeking feedback by March 2025.

The outcomes of these discussions could lead to further changes in how business rates are calculated and applied, which could affect budgeting and financial planning for businesses within these sectors.

Advice from Mariske: “Stay informed and engaged with the ongoing discussions about business rates. Our advisory services can help businesses understand potential outcomes and prepare accordingly.”

How BM Connect Can Assist:

These changes necessitate a robust response to ensure that businesses not only comply with new laws but also leverage these adjustments for strategic advantage.

BM Connect’s tailored services for the hospitality and leisure sector include:

1. Payroll Solutions: At BM Connect, we understand that payroll management can be particularly challenging in the hospitality and leisure sector, where seasonal employment and fluctuating hours are common. Our payroll management services are designed to handle these complexities effortlessly. We help businesses adapt to changes in wage laws, manage employee classifications, and ensure accurate and timely payroll processing. Our systems are equipped to integrate new tax rates and adjust to changing payroll thresholds, thereby reducing the administrative burden and minimising errors.
2. Management Reporting: In a sector driven by consumer demand and preferences, real-time management reporting is crucial. BM Connect provides cutting-edge cloud-based solutions that offer real-time insights into financial performance, operational costs, and revenue management. These tools allow businesses to make informed decisions quickly, adapt strategies to changing market conditions, and enhance overall business responsiveness. Our reporting tools also help in monitoring the impact of fiscal changes, such as adjustments in business rates and tax obligations, on the business’s bottom line.
3. Accounts Preparation: With the introduction of new financial regulations, precise and compliant accounts preparation becomes more important than ever. BM Connect aids businesses in the hospitality and leisure sector by ensuring their financial statements and tax returns are accurate and compliant with the latest regulations. This includes adapting accounting practices to accommodate changes in capital gains tax and managing the implications of altered business rates. Our expertise helps businesses not only stay compliant but also optimise their tax positions and uncover potential savings or incentives.

Proactive Planning and Continuous Support

Understanding that the hospitality and leisure sector requires agility and proactive financial management, BM Connect offers continuous support and advisory services. From navigating the intricacies of tax changes to implementing effective cost-control measures and exploring new growth opportunities, our team is here to support your business every step of the way.

Conclusion

The landscape for the hospitality and leisure sector continues to evolve, driven by regulatory changes and economic shifts. With BM Connect’s specialised services, your business can navigate these changes with confidence, ensuring that you not only comply with new regulations but also thrive in a competitive environment. To find out more about how we can assist your business in adapting to these changes, visit our services page or contact us for a personalised consultation.

You can also read our comprehensive Budget Summary, produced by Beavis Morgan’s tax experts. BM Connect is a Beavis Morgan group company.