Audit, tax and consulting firm RSM UK said after analysing gov.uk figures relating to company insolvencies published on Tuesday 21 January 2025, the 13% drop in November 2024 represented a fall from 375 companies in November 2023 to 327 in November 2024.
However, that figure was tempered by the 29% rise from 253 insolvencies in October 2024 to 327 the following month.
RSM UK partner and head of leisure and hospitality Saxon Moseley said: “As the first month of insolvency data since Rachel Reeves’s Budget in October, the month-on-month rise in insolvencies in November could be an early warning sign of what’s to come for the hospitality industry.
Damaging for the sector
“The tax rises set to hit operators from April are likely to be the final straw for some.
“The lowering of the threshold for employers’ national insurance contributions (NICs) is particularly damaging for the sector, given its reliance on part-time and casual workers.
“The unintended consequence could be that employers focus on utilising their existing workforce and full-time workers instead, putting younger individuals or those with caring responsibilities at a disadvantage.
“Despite households sitting on record savings, the consumer-led recovery that many operators are hoping for hasn’t come to fruition yet.
Expected uptick in confidence
“Those that are able to ride out the storm and navigate the hurdle of NICs changes in April will be well positioned to take advantage of the expected uptick in consumer confidence later on in the year.
“There will also be consolidation opportunities for well-capitalised operators as they look to grow and bring efficiencies through strategic acquisitions.”
RSM UK’s announcement comes at time when UKHospitality announced the change of NICs could “drag” more than three quarters of a million hospitality employees into the employers’ NICs for the first time.
UKHospitality added the “regressive changes” to employer NICs will “hit hospitality hardest”, due to the high number of employees working part-time or flexibly in the category.
