Hospitality, leisure and tourism businesses will need to prepare for increases to the National Minimum Wage and employer’s National Insurance contributions along with the reduction in Business Rates Relief – all of which come into effect from April 2025.
This will be particularly challenging and follows a period which has seen a multitude of cost rises, resulting in business already having increased prices.
Whilst businesses will need to once again revisit pricing strategies, it is not always possible to pass on the entirety of cost increases to customers and other ways of becoming more efficient may need to be considered.
How can businesses prepare?
Various actions can be taken to plan for the changes and to help ease the impact they have.
- Budgeting and cashflow forecasting is even more crucial during periods of substantial change. Businesses should be updating and reviewing forecasts to understand the impact of the incoming changes.
- The business rates relief reduction to 40% means there is never a better time to review your business rates and rateable value to ensure you are not being overcharged in error. If you believe you are being incorrectly assessed then you can submit a Rateable Value Appeal.
- By offering salary sacrifice options to your employees, such as pension contributions, the leasing of a car, or buying a bicycle, you can save Employer’s National Insurance on the amount sacrificed. (Note: this option may not be applicable to all employees)
- It may be worth considering investing in energy efficiency and renewable energy sources. Many businesses are already doing this and seeing substantial ongoing cost savings as a result. There are also specific tax advantages for investment in renewable energy.
- Implementing technology solutions – such as automation of your accounting software or booking and revenue management system – will help streamline operations, reduce costs, and enhance efficiency.
- Investing in staff training and development where possible could be a valuable initiative to improve service quality and operational efficiency across the business. This could result in both cost savings, and increased revenue due to customer satisfaction.
Whilst the budget was not good news for the sector, hopefully the points above highlight some of the areas you may wish to explore to help streamline your business in advance of the additional cost burdens arriving in April 2025.
