COVID-19Small to Medium Businesses

Hospitality & Tourism Incentives As Lockdown Eases

By July 16, 2020 August 6th, 2020 No Comments

With the world starting to reopen, it’s pertinent that businesses make themselves aware of the incentives available to the hospitality and tourism industries.

Partially empty cafe

As these sectors have struggled due to forced closures, businesses should take note of new measures that seek to catalyse their recovery. With legislation that spans from VAT cuts to restaurant discount schemes, there are numerous ways for the hospitality industry to entice customers once again.

Though some level of consumer trepidation should be expected even with restrictions beginning to lift, the general mood of the UK’s population signals a gradual return to hospitality.

 

6-month VAT Cut From 20% to 5% For Hospitality & Tourism Businesses

On the 9th July, Rishi Sunak announced a VAT break for restaurants, hotels and tourist attractions that would form part of a package to get Britain spending again. As the country continues to emerge from the coronavirus crisis, spending has understandably stalled, with many Brits fearful (or otherwise unable) to go out and spend.

With the cut in VAT set to fall from the current level of 20% to a mere 5%, it is hoped that businesses will see a significant financial reward. As this adjustment to VAT for the hospitality and tourism industries are set to remain in place until January of 2021, the measure may be enough to bolster these industries as the public begin contributing once more.

As saving the hospitality and tourism industries will require a large injection of spending from the public, it is unsurprisingly that the chancellor’s efforts centre around getting the public back through the doors of these businesses. Though it is difficult to predict consumer spending habits, it’s expected that this VAT cut will reduce job losses and benefit over 150,000 businesses.

With firms able to slash prices without taking a large cut, this move could help to revive these sectors over the next 6 months.

 

 

‘Eat Out to Help Out’ Discount Scheme

 Another incentive that has been rolled out under Rishi Sunak’s ‘mini-budget’ is the ‘Eat Out to Help Out’ discount scheme. Directly engineered to encourage the public to visit restaurants and improve profit potential, the scheme aims to incentivise both the customer and business owner.

The scheme itself is relatively straightforward. Diners will get a 50% off their restaurant bill during August with a maximum discount of £10 per head when they eat or drink on your premises between Monday to Wednesday. With the government assuring the public that it is now safe to dine out, there is hope that this incentive will drive more people to restaurants that have been struggling to stay afloat during the pandemic.

With the discount being available for use unlimited times during August, it’s certainly a powerful incentive for customers that have found themselves at greater financial odds due to the crisis. With 1.8 million people working in restaurants, cafes, and pubs, this is a powerful step in protecting jobs in a way that will also help to cultivate greater economic growth.

Businesses that wish to take part in the scheme will need to register here. Each week throughout August, businesses will then be able to claim back the money passed off to customers through this discount, with funds generally appearing in accounts after five working days.

Though this policy does not apply to any alcoholic drinks purchased, the discount on food and soft drinks will hopefully bring more footfall to restaurants on their typically quieter days as well as encourage the public that it is safe to eat out again.

 

 

Furlough Tapering

As the furlough scheme is set to gradually wind down until its end in October, changes to business operations are highly likely. From the 1st of July, businesses will be able to bring employees back on a part time basis, paying for those part time hours while the government tops up their salary to 80% – find out more in this blog. For businesses that are set to require greater manpower as they navigate the new normal, flexible furlough is a useful way for these companies to get back to business without the prohibitive costs of paying a worker’s full salary.

Businesses that choose to bring employees back (whether on a full time or part time basis) will be responsible for paying all wages for hours worked. However, the employee’s salary will still be largely covered under the furlough scheme if brought back on a part time basis during July and August, but all this is set to change going forward.

In addition, from the start of August the government will no longer cover NI and pension contributions for any furloughed staff or furloughed hours a worker is entitled to. The business will need to budget to allow for these payments to resume. With a greater level of detail regarding the tapering of the scheme during the months of July, August, September, and October, we would urge you to read our previous blog and plan in advance for the next few months.

 

£1000 Job Retention Bonus

To follow on from the tapered furlough scheme, currently due to end in October, Rishi Sunak announced an incentive for struggling businesses to retain staff on furlough which is intended to encourage businesses to step job losses between November and January 2021.

The bonus of £1000 per employee will be available by Feb 2021 for businesses who retain staff members has already come under criticism from many. For one, a £1000 payment per employee in February is well and good – but if you cannot afford to pay that employee between November and January it holds little hope of coming to fruition.

Similarly, some businesses may take advantage and claim their £1000 per employee when they never would have intended or had the need to lay off staff members during the November to January period.

 

Undoubtably, this is the most trying time in modern history for the hospitality industry. Added uncertainty over possible future local or national lockdowns is adding stress to an already stressed system. We would encourage all hospitality businesses to maintain the hard work they did during lockdown to diversify, and continue to look at diversifying their offerings to plan ahead.

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