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Another year, another Autumn Statement with some minor tweaks to the UK tax system, and the continuation of one major one, starting from January 2024.
As usual, we'll be looking at the changes through the lens of the independent hospitality business.
Don't believe the hype, here's what it means for you...
Minimum Wage rises
The biggest impact for hospitality businesses will be felt on your staff costs, because of the annual increase in minimum wage rates.
These are going by 10%-15% from 1 April 2024 - depending on the age bracket.
There's also the removal of the 21-22 age bracket, meaning everyone 21 and over will be paid the full "National Living Wage" (not to be confused with the Real Living Wage).
Here's a breakdown of the upcoming changes:
Age Group | Current rate (up to 31 March 2024) | New rate (from 1 April 2024) | % increase |
21 and over | £10.42 / £10.18 | £11.44 | 10% / 12% |
18-20 years old | £7.49 | £8.60 | 15% |
16-17 years old | £5.28 | £6.40 | 21% |
Apprentice | £5.28 | £6.40 | 21% |
When preparing your forecast for 2024, we’ll factor in these changes to show the impact on your labour costs & operating profit.
Employee NIC reduction from 12% to 10%
Employees will also benefit from a reduction in the rate of employee National Insurance from 12% to 10%.
Note this doesn't have any effect on the employer's costs, it just means an increase to employees' net pay, and HMRC receiving less cash as a result.
Business rates reduction for hospitality frozen for another year
Big win for hospitality businesses - the 75% business rates discount for retail, hospitality and leisure businesses will be extended for another year.
This means that the rates bill for 2024/25 will be the same as what you’re currently paying (assuming no changes to the rateable value).
Alcohol duty
Another win, albeit much smaller - there will be a freeze on alcohol duty until 1st August 2024.
That should stave off a portion of price increases from booze suppliers that would otherwise have kicked in in the meantime.
Pensions
Employees will have the right to have “one pension pot for life”, meaning employers can be asked to pay pension contributions into their employees' existing pension pots from previous jobs.
We're awaiting further details on how this will work in practice.
Changes to NIC for Self-Employed
If you have any freelance team members working for you - there are some changes to the NIC that they will pay to HMRC.
Class 2 national insurance contributions (currently £3.45 per week, £179.40 per year) will be axed.
Class 4 contributions will reduce from 9% to 8% on profits between £12,570 and £50,270 which will reduce the tax bill of someone self employed by a further £377 per year.
Again, this doesn't affect the costs of the business directly, it just means the self-employed staff get to keep more cash and HMRC receives less as a result.