Tough time for retail, hospitality, and leisure

Businesses in the retail, hospitality and leisure sectors may be suffering at the moment, but advice is available to help navigate the challenges being faced.

Louis Taylor explains.

As the dust settles after Labour’s first budget in almost 15 years, businesses in the hospitality, retail, and leisure (RHL) sectors face pressing challenges that demand careful planning and decisive action.

Changes to Business Rates Relief

One of the main concerns for businesses is the changes being made to the Covid-era business rates relief. 

Starting April 2025, the 75% RHL rates relief will be reduced to just 40%, with a cap of £110,000 per business for the 2025–26 period. 

While the small business multiplier will remain frozen at 49.9p, the standard multiplier will rise to 55.5p, signalling a sharp increase in costs for many businesses. 

For high-street shops already struggling with high business rates, this reduction in relief will intensify the tax burden on a sector that is still trying to regain its footing. The lack of immediate government support for RHL businesses leaves many facing an uncertain future.

Changes to Employer’s National Insurance and National Minimum Wage

The Labour government has pledged to reform the business rates system, a move welcomed by many. 

However, concerns persist among many businesses over the lack of immediate action, as the financial strain of business rate bills for high street premises will remain significant when the reduction in relief takes effect in April 2025.

Compounding these challenges are rising employment costs. 

From April 6, 2025, the rate of employers' National Insurance contributions (NICs) will rise from 13.8% to 15%, while the threshold for contributions will drop from £9,100 to £5,000. Furthermore, the National Living Wage will increase by 6.7% to £12.21 per hour, and the National Minimum Wage for 18- to 20-year-olds will jump by 16.3% to £10.00 per hour.

For a sector reliant on minimum-wage workers, these changes pose a significant threat. 

The increased cost of employment, coupled with reductions in business rates relief, will narrow already slim profit margins, making it even harder for smaller and mid-sized businesses to compete with larger companies.

The need for Strategic Planning

Our team has extensive experience supporting businesses across these sectors, helping them navigate the unique challenges they face. 

In the current climate, we’re seeing more businesses than ever seeking advice to address rising costs and maintain their competitiveness. 

For many mid-market RHL businesses, tough decisions and strategic planning must be made to weather this period of financial pressure.

Contact us

If you would like to discuss how these issues affect your business, our Restructuring Team would be pleased to speak with you.