Premier Inn owner Whitbread has said that business rates relief measures announced in the autumn Budget could reduce its annual costs by as much as £60 million by 2029, with the hospitality sector welcoming the two-year freeze.
The hospitality giant said the Chancellor's decision to freeze property taxes for two years for retail and hospitality businesses would have a "significant" positive impact on its finances.
Rates bill projections revised
Whitbread's total business rates bill is now expected to rise by between £7.5 million and £12.5 million in 2027-28, compared with earlier forecasts of around £35 million, with a similar increase anticipated the following year. This means rates payments will be between £45 million and £60 million lower by 2028-29 than previously projected.
The announcement follows the Government's decision to raise the national minimum wage by 3.9%, while opting against a steeper increase for younger workers, given the growing number of unemployed under-21s attributed to rising labour costs.
Industry reaction
Dominic Paul, Whitbread chief executive, said: "The business rate measures announced in the UK Budget will do much to mitigate the damaging impact of the past two budgets on the hospitality sector, and we are grateful that the Government has listened to our concerns."
"Limiting the increase in business rates over the next two years to inflation, together with a more reasonable increase in the national living wage and national minimum wage, will make a significant difference to our business."
Government measures
Chancellor John Healey used his maiden Budget to bolster support for Britain's high streets, outlining plans to fund the measures by hitting gambling firms with more tax hikes and launching an online sales tax crackdown. He raised the threshold for 100% small business rates relief for retail and hospitality firms from £12,000 to £18,000, with tapered relief from £21,000, up from £15,000.
Across the broader retail and hospitality sector, real-terms business rates bills will also be frozen for qualifying properties in England in 2027-28 and 2028-29.
Gambling tax impact
Gambling firms will face an increase in duty on machine games with stakes over £1, rising from 20% to 25% from April next year, to help fund the support package. However, the duty rise falls well short of initial fears, with pre-Budget speculation suggesting the tax could be doubled.
Mecca Bingo owner Rank revealed on Thursday that the tax increase would set it back around an extra £9 million a year, with an impact of approximately £2 million in the current financial year to June 2027. On Wednesday, Ladbrokes and Coral owner Entain criticised the machine games levy as "another disappointing decision" and cautioned it would see the firm fork out an extra £25 million a year.
This comes on top of gambling tax rises introduced at last November's Budget. Shareholders in betting companies initially breathed a sigh of relief that the tax increases had not gone further, with sector stocks surging on Wednesday. However, those gains were partially reversed on Thursday as the full extent of the financial implications came into sharper focus, with Rank seeing shares fall 4% and Entain 2% lower.
