The Chancellor’s Pre-Budget Report this month was as unhelpful to the hospitality industry as the previous Chancellor’s Budget in March, when Gordon Brown abolished the Hotel Buildings Allowance.

Firstly, because of the removal of so-called taper relief in Capital Gains Tax, hoteliers and restaurateurs who sell their business on retirement will be paying 80 per cent more CGT than they would have done before the Spending Review: 18 per cent, not 10 per cent.

In fact, the tax hike could well be more in the hospitality industry, where ownership tends to be long-term, because the Chancellor has also got rid of inflation indexing before 1998. As most hotels are owned for many years – indeed, for a generation or two - this could leave these owners with an even higher tax bill if they sell after next April.

Secondly, the proposal to give local councils powers to raise an additional two pence in the pound rate for specific developments raises the prospect of additional charges on business rates - even though not every business will gain from the proposed development. True, very small businesses will be exempted but for how long? And if there is to be a vote, who will be eligible to vote and how will that be organised?

Thirdly, the central funding increase for local authorities is pegged at one per cent, so what will have to give way? It’s not difficult to see that the so-called non-essentials will get cut back, including all aspects of leisure activities and those services which attract visitors to the area and which make it attractive and worth visiting. An increase in licence fees will also be a soft target, so expect to pay more there.

Finally, public support for VisitBritain is waning. The official grant-in-aid has stayed at £35m for the last eight years – an effective annual reduction. This year, it’s actually been reduced by 18 per cent over the next three years – not evidence of genuine support for an industry that earns over £13bn in foreign exchange.

In total, this makes for pretty grim reading for any small business, but particularly for those in the hospitality industry.

Bob Cotton

Chief Executive