Leisure and hospitality venue investors were mostly pleased with the Chancellor of the Exchequer’s Autumn Budget announcements, with a range of new reliefs offered to sectors that have been hard hit by the pandemic, plus a radical rejig of alcohol duty.
To help offset the effects of cost inflation, which some pub owners warned will drive up the price of a pint, Rishi Sunak announced a new one year 50% business rates discount for retail, hospitality, and leisure companies, such as pubs, music venues, cinemas, restaurants, hotels, and gyms.
“Any eligible business can claim a discount on their bills of 50% on their bills up to a maximum up to GBP110,000,” the Chancellor said in his speech.
He said this tax cut was worth almost GBP1.7bn.
Pub companies with big estates, such as Mitchells & Butlers (LSE:MAB) (LSE:MAB) and JD Wetherspoon (LSE:JDW) celebrated with their shares rising over 3% and almost 5% respectively. Premier Inn hotel chain owner Whitbread, Wagamama owner Restaurant Group PLC (LSE:RTN) and Cineworld Group PLC (LSE:CINE) were all up around 1%, while other sector names such as The Gym Group PLC and Fulham Shore PLC were only slightly higher.
Sunak also announced a major overhaul of alcohol duties and a slashing of taxes on draught beer and ciders, with what he said was a much needed restructuring of alcohol duty, which was first introduced in 1643 and is now “outdated, complex and full of historical anomalies”.
Five new steps were outlined to simplify the system.
First, the number of main duties will be cut from 15 to six, with new system of “the stronger the drink the higher the rate”. This should result in slight increases for high-strength white cider, stronger red wine, fortified wines. Meanwhile, lower-alcohol drinks such as weaker beers, rose wine, liquors, fruit ciders will now face lower duties.
Pubs, which were struggling even before the pandemic, were the focus of the another step, as the Chancellor announced a new ‘Draught Relief’, applying a new lower rate of duty for draft beer and cider. It will apply to drinks served from containers over 40 litres. It will particularly help community pubs, he said.
Duty will be cut duty by 5%, which equates to 3p off the cost of a pint.
To help the hospitality industry, a planned increase in duty on spirits, wine, beer and cider will be cancelled, from tonight. This is a tax cut worth GBP3bn Sunak said.
He also announced a proposal to help craft producers by including small-brewers relief to include small cider makers, for drinks with an ABV under 8.5%.
Another step concerned sparkling wine, which will now pay same duty as still wine, wherever they are produced, meaning English and Welsh wines will pay less than they currently do.