With Freedom Day on 19 July, we all expected a return to normality, whatever that means now. As with a decent summer, that hasn’t happened really. Hospitality faces continued challenges as we leave summer, edge into autumn and face high Covid-19 infection rates. The trials hospitality now faces are as severe as they have ever been over the past 18 months.
VAT changes are afoot
To help businesses in what the Chancellor, Rishi Sunak, called an “economic emergency”, the Government cut VAT for hospitality to 5% from its standard 20% rate. Meant to last until March 2021, the Chancellor then extended this until 30 September in his budget this year. From 1 October, it was raised to 12.5% before it returns to its pre-pandemic level in April 2022.
Then there’s a shortage of employees in the sector
On top of the VAT changes, the sector faces a severe shortage of labour. Before Covid-19 struck, the industry had 91,000 vacancies in 2019. From April to June this year, that had risen to 102,000. The BBC reports that one in five workers left the sector during the pandemic with both Covid-19 and Brexit cited as reasons.
Vaccine passports are another issue
Both the UK and Scottish Governments did pledge to introduce vaccine passports. While the devolved administration in Edinburgh legislated in September, uncertainty remains around the scheme in England. The UK Government planned to start deploying vaccine passports in England in September but it has now stated they will only be used as part of its winter plan if infection rates soar.
The scheme is designed to limit the transmission of Covid-19 at mass events like football matches and nightclubs. Yet the details, for England at least, are still to be worked up and this has made the sector nervous. Michael Kill, the Chief Executive of the Night Time Industries Association, remarked that “staffing, technology, everything’s got to be put in place. There’s so much work to do in terms of defining who and what needs to be done … the list’s endless”.
And then there are supply problems
The UK economy is facing severe supply problems, not just in hospitality. The Road Haulage Association says that there is a shortage of over 100,000 lorry drivers in the UK, out of a pre-pandemic total of 600,000. Even before Covid-19 hit, the UK faced a 60,000 driver shortage.
This has had a big impact on the sector. Nando’s temporarily closed 50 sites; Wetherspoons ran out of beer at some pubs; and McDonald’s stopped sales of milkshakes and bottled drinks because of the driver shortages.
Later this same shortage began to impact fuel deliveries – with huge queues at fuel courts and people preserving the fuel they did have the industry no doubt took another small blow.
Speaking of fuel
Whatsmore, with the cost of energy prices rising sharply, so much so we have already lost a few energy providers from the marketplace, this is yet another expense that businesses in hospitality will need to negotiate.
It’s been a period of constant change
With all of this change – the pandemic itself, shortages of employees and HGV drivers, and shortfalls in supplies – the hospitality sector has had an incredibly tough time. And now with the VAT changes, it faces more challenges. But both FoxKash and Foxley Kingham can help you through this storm.
How can we help?
FoxKash offers cloud accounting and bookkeeping support for busy business owners – FoxKash is an independent service from Foxley Kingham designed to give our clients expert online bookkeeping support. Sitting alongside our established offering, FoxKash is a standalone business with its own fee structure that offers expert online accounting at an affordable price.
At Foxley Kingham, we have a range of services that can support you now. We can help you with your VAT as the fiscal regime evolves and support you plan your tax payments effectively.