The leading accountants in Leeds for restaurants and cafes.

The Chancellor's Budget 2024 brings significant changes that could directly impact restaurants, cafes, and takeaway businesses. Here’s a breakdown on the key points that matter most for hospitality and food service businesses. Tax Adjustments Impacting Payroll and Profit Margins National Insurance Changes for Employers : From April, businesses will need to contribute National Insurance on earnings over £5,000 (previously £9,100), with rates rising from 13.8% to 15%. For restaurants and cafes employing a large number of staff, particularly those on lower wages, these increased costs could impact profit margins, so advance planning will be essential. Increased Employment Allowance : The Employment Allowance, which allows businesses to offset some of their National Insurance liabilities, will rise from £5,000 to £10,500. This provides welcome relief for smaller hospitality businesses, helping to reduce overall payroll costs. If you’re unsure of eligibility, we can help determine how this allowance may benefit you. Wage Increases Affecting Staffing Costs Minimum Wage Increases : From April, the National Living Wage will rise from £11.44 to £12.21 for employees aged 21 and over. This, along with similar increases for younger employees and apprentices, will raise staffing costs across the board. Restaurants, cafes, and takeaways relying on part-time or seasonal staff may want to review wage budgets and consider any necessary menu pricing adjustments to balance these costs. Apprentice Wage Increase : The minimum wage for apprentices (under 19 or in the first year of an apprenticeship) will increase from £6.40 to £7.55 per hour. This may impact businesses running apprenticeship programmes or employing younger staff, so factoring these adjustments into your payroll budget will help to avoid unexpected expenses. VAT, Alcohol and Tobacco Tax Changes Alcohol Tax Increase on Non-Draught Drinks : For businesses selling non-draught alcohol, taxes will increase in line with the higher Retail Price Index (RPI) measure of inflation. However, taxes on draught drinks will see a 1.7% cut, providing some relief to pubs and licensed cafes. This could affect pricing strategies for any hospitality business with an alcohol licence, and reviewing your stock and pricing could help maximise margins. Tobacco Tax Increase : If your business sells tobacco, either directly or through vending machines, note that tobacco taxes will rise by 2% above inflation, with hand-rolling tobacco taxed 10% above inflation. Be prepared to adjust prices to maintain profitability. Transport and Fuel Costs Fuel Duty Extension : The 5p cut in fuel duty on petrol and diesel has been extended for another year, helping keep delivery and transport costs stable. For restaurants and takeaways that manage deliveries, either in-house or through third-party providers, this offers a small but beneficial saving on logistics costs. Bus Fare Cap Increase : From January 2025, the cap on single bus fares in England will rise to £3. While this change primarily affects customer costs, it may indirectly impact businesses in high foot-traffic areas or those with employees who rely on public transport. Property and Investment Considerations Stamp Duty Surcharge for Second Properties : For those looking to expand by acquiring a second location, the stamp duty surcharge on additional properties will rise from 3% to 5% in England and Northern Ireland. This may affect future expansion plans, so careful financial planning is recommended. Inheritance Tax and CGT Implications : From 2027, pensions will be included in taxable estates, which may affect succession planning for family-run hospitality businesses. Additionally, capital gains tax (CGT) rates are increasing from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers. If you’re considering selling shares or investments, this change may be relevant. Need help? Get in touch With these Budget adjustments set to impact everything from staffing and payroll to inventory and expansion, understanding the implications for your hospitality business is key. MSF Accountancy is here to help you make sense of these changes, develop strategies to manage increased costs, and identify opportunities for savings. If you’d like to discuss how the Autumn Budget affects your business, please don’t hesitate to reach out on 0113 240 4100.