Rachel Reeves’ tax hikes will cost me £1m

The founder of the alcoholic drinks empire behind the likes of Hooch and VK has warned the tax hikes announced by Rachel Reeves will cost him an extra £1m.Steve Perez, the boss of Derbyshire-headquartered Global Brands, added that the Chancellor has “stacked the odds” against businesses like his and that he has “no choice” but to raise prices.As well as VK and Hooch, the group’s brands include Franklin & Sons, Be, All Shook Up, Shake Baby Shake, Beviamo, Kick Energy Drink, Lustre, Amigos Tequila Beer, Take Tequila, Corky’s, Mango Go, Hoopers, Jungfrau, Reef and Teichenne.

The group also owns the Case Hotel in Chesterfield and Peak Edge Hotel on the outskirts of the town and has a residential property development arm.His comments about Rachel Reeves’ tax hikes come after City AM reported in June 2024 that Global Brands saw its profit slashed as costs surged despite the group raising prices.In February, Perez said he had decided to spend £100,000 a year on life insurance for the next decade to protect his businesses from the changes to inheritance tax.

The policy would pay out around £6m if he were to die.‘We have no choice but to raise prices’Perez said: “The Chancellor’s measures set to come into force in April will create a perfect storm for the hospitality industry.“The increases to the National Minimum Wage and employers’ National Insurance contributions, combined with reductions to business rates relief, will have disastrous consequences for businesses.

“As an employer, I’m proud that the lowest rates of pay in my businesses are set above the minimum wage threshold but it goes without saying this will have a huge impact on businesses, especially in service sectors like hospitality.“The increase to minimum wage positions will have a domino effect on every pay bracket across businesses.“We will have no choice but to raise the floor of that pay scale and increase salaries at all levels in order to attract talent and incentivise career progression.

“This alone will cost the business a huge amount, before even taking into consideration the increased National Insurance contributions.“To put it in perspective, my businesses are now looking at an extra £1m in taxes. This is simply far too much for us to absorb and inevitably means we will be forced to increase our prices for customers.

”‘Chancellor Rachel Reeves has stacked the odds against us’Perez argues that this will have “implications for the wider job market”, stating that the new minimum wage rates will mean it will cost £2.21 per hour more to employ someone over the age of 21.He added that it will also have a negative impact on the holiday job market, “as there’s less of an incentive for employers to hire and train up younger workers”.

“Another issue to consider is that EPR [extended producer responsibility] will also be coming into effect from 1 April – making the increased staffing cost and NI contributions even less affordable”, he added.Perez said: “One of the issues currently with EPR is that it fails to account for the fact that hospitality venues have their own commercial waste streams in place, and instead states that 100 per cent of on-trade waste must incur EPR fees. It basically results in excess charges for pubs and hospitality.

“I’d urge the Chancellor to consider the factors addressing the hospitality industry and address these with a different approach, such as delaying either EPR, or failing that, the increase in costs for pubs and hospitality this April so businesses aren’t hit with a double whammy.“Another measure that would greatly support the industry and provide a lifeline to hospitality venues would be an extension to the existing business rates relief. Additionally, reconsidering VAT for hospitality venues would make a significant difference.

“At present, it feels like the odds are stacked against restaurants, pub and bar operators. If you go to a supermarket and purchase a ready-meal, regardless of quality, portion size and packaging, there’s no VAT.“Whereas if you come for a meal in our restaurant, where we’re employing lots of young people, sourcing produce from local farmers, cooking from fresh and serving up with no packaging, we have to charge 20 per cent VAT.

It feels completely counter-intuitive.”.