The UK’s hospitality sector is facing an unprecedented financial squeeze, with one of the biggest burdens coming from VAT. At 20%, UK hospitality businesses pay one of the highest VAT rates in Europe, far above countries such as France (10%), Spain (10%) and Italy (10%). This significant tax gap makes the UK the highest taxed hospitality market in Europe, directly impacting profitability and pricing competitiveness.
For hotels, restaurants, pubs, and holiday parks, the challenge does not stop at VAT. Rising energy costs, increased business rates, staff shortages, and supply chain inflation are all eroding margins. The combination of high taxation and escalating operating costs means many hospitality owners are struggling to invest in improvements or expand their offering, both essential for long-term growth.
One way to recover some of these lost funds is through a capital allowances claim. Many hospitality property owners are unaware they can claim tax relief on qualifying expenditure for embedded fixtures, refurbishments, and even property purchases. Items such as heating systems, lighting, commercial kitchens, and sanitary installations can often qualify for substantial tax savings.
A capital allowances review can unlock thousands of pounds in unclaimed relief, reducing taxable profits and freeing up cash for reinvestment. In some cases, up to 40% of qualifying costs can be offset, offering a vital financial lifeline in a heavily taxed environment.
At a time when UK hospitality businesses are battling to remain competitive against lower-taxed European markets, every available relief matters. Claiming capital allowances is not just good tax planning, it is a survival strategy.
