"2025 is proving to be one of the most challenging years yet for the hospitality industry in the UK, with the increase in National Insurance contributions and London Living Wage, the decrease in business rates relief, and the 20% rate of VAT putting a huge strain on the industry. Venues continue to close, with two hospitality sites closing per day in the first six months of the year and the hospitality sector accounting for 53% of all job losses in the UK since the Budget."
"From that £22, VAT takes 20%. This leaves £18.33. From this, ingredients take 25%, operational costs take 22%, rent and bills 7%, staffing - which used to be 40% 2 years ago - is now 46% and can go up to 55%. So, in good months, we break even and in slow months, make a loss. The VAT bill is £20k each quarter, which is just about manageable if sales are as budgeted."
2025 presents severe financial pressure for UK hospitality because of higher National Insurance contributions, the London Living Wage, reduced business rates relief and a 20% VAT rate. Two hospitality sites closed per day in the first six months and the sector represented 53% of job losses since the Budget. A #TaxedOut campaign and an open letter to the Chancellor demand urgent action. Independent operators report razor-thin or negative margins: common dishes can yield no profit after VAT, ingredients, operations, rent and staffing costs, and owners sometimes inject personal funds to cover tax bills and survive downturns.
Read at London On The Inside
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