Hospitality and leisure: maximising reliefs in challenging times
The hospitality and leisure sector continues to face sustained financial pressure; rising costs, wage inflation, supply chain volatility and regulatory changes are all squeezing margins. In this environment, every saving counts. Ensuring you are claiming all available reliefs, incentives and support measures can make a meaningful difference to cash flow and profitability.
Below is a practical checklist of reliefs and opportunities that operators should be reviewing now.
1) Tax reliefs you can claim now
VAT bad debt relief
If a customer debt remains unpaid for six months, you may be able to reclaim the VAT already paid to HMRC.
Use it: Build a monthly routine to identify eligible debts so you do not miss any claims.
Business rates relief
You may be eligible for small business relief if you lost your retail, hospitality and leisure business rate relief.
Use it: Review each property’s eligibility and consider ‘check-challenge-appeal’ where rateable values appear high.
Capital allowances
Full expensing offers 100% relief on qualifying plant and machinery, from kitchen equipment to EPOS systems.
Use it: Prepare a costing schedule to maximise relief on qualifying spend.
PAYE Settlement Agreement (PSA) exemptions
Ensure exemptions such as trivial benefits, annual events and canteen arrangements are correctly applied.
Use it: Cross check PSA items against staff benefits and site level‑ practices.
2) People and productivity
Employer National Insurance contributions (NIC) reliefs
Reduced employer NIC may apply for under 21s and certain apprentices under 25.
Use it: Align rota planning and apprenticeship pathways to capture savings.
Apprenticeship funding and levy transfers
Use it: Partner with local levy paying employers and further education providers to build sustainable training pipelines.
Optimise tronc arrangements
A compliant independent tronc can materially reduce your employer NIC while supporting fair distribution of tips.
Use it: Review governance, software and allocation rules to ensure efficiency and compliance.
3) Energy, sustainability and investment
Local sustainability grants and energy efficiency funding
Many local authorities offer grants or loans for heat pumps, insulation, LED upgrades and kitchen equipment.
Use it: Maintain a register of regional schemes and time refurbishments to align with funding windows.
EV charge point incentives
Hotels and leisure operators may benefit from capital allowances and local support.
Use it: Assess guest demand and explore partnership models to fund installation.
Structures and Buildings Allowance (SBA)
This allowance gives a 3% annual deduction for qualifying construction and renovation costs.
Use it: Tag building and fitout costs early so relief is not lost within general capital expenditure.
4) Strategic planning and ownership
Employee Ownership Trust (EOT) route
EOT transitions can support succession planning and enhance staff engagement.
Use it: Explore feasibility where founder succession or cultural transformation is a strategic priority.
Group structuring and loss relief planning
Optimising how profits and losses are pooled across brands or sites can improve tax efficiency.
Use it: Conduct an annual ‘structure MOT’ before year end.
5) Additional reliefs worth reviewing
Give your remuneration a health check
With recent changes to corporation tax, NIC, and dividend tax rates, it is important to ensure drawings remain efficient.
Use it: Review the balance between salary, dividends and pension contributions to maximise corporation tax relief.
VAT on promotions, vouchers and deposits
Correct VAT treatment on multi rate menus, service charges and gift cards can prevent VAT leakage.
Use it: Undertake a VAT check ahead of peak trading periods.
Land Remediation Relief
This relief is available where businesses are developing or refurbishing sites on contaminated land.
Use it: Engage early during acquisitions or major refurbishment projects.
Help from the experts
In a sector where margins are tight, these reliefs and incentives can provide valuable breathing room, but many are underclaimed or overlooked entirely. Our hospitality and leisure specialists help you identify the opportunities relevant to your business and support you in maximising the benefits available. Please note that the availability of reliefs mentioned depends on specific conditions and may change over time.
If you would like to discuss anything discussed above, please contact Leigh Collins lcollins@mks.co.uk.
