The FSB has warned that small businesses in the retail, hospitality and leisure sector face an average 52% increase in business rates bills, phased in over the next three years – and with the recent news that pubs will be the only hospitality business to receive a support package from the government, many are looking for other ways to save.
If you run a restaurant, for example, there are steps you can take to mitigate the effects of rising costs and save your business money.
In this article, we’ll break down the types of tax deductions restaurant owners are eligible to claim – and explain why hiring an accountant might be the best thing you can do.
Claim expenses against your tax bill
Some business owners miss out on expense claims because they’re nervous about what they can claim, or didn’t know that they could. The expenses your restaurant claims might include things like:
- Staff wages and benefits
- Rent and rates
- Utilities (gas, electricity, water, etc)
- Food and drink stock
- Kitchen equipment and maintenance
- Business insurance
- Staff uniform and workwear
- Marketing and advertising
- Staff meals
You can also claim capital allowances, which are a type of tax relief which businesses can claim when they invest in long-term assets.
Sometimes called fixed assets, these are assets you can reasonably expect to stay in use by the business for longer than 12 months.
It’s a bit different just claiming an expense in the year it happens, because claiming capital allowances means you can deduct part or all of the asset’s value from your profits for each year it stays used by the restaurant. Businesses pay tax on their profits, so reducing the amount means you pay less tax.
Get relief on business rates
Small Business Rates Relief (SBRR) is a type of tax relief in England, designed to either reduce or eliminate business rates for qualifying small businesses.
But first off, if your business only uses one property and its rateable value is under £12,000, you won’t need to worry about business rates at all.
If the rateable value is between £12,001 and £15,000, you can still claim small business rate relief, though how much you can claim gradually reduces across that range.
For example, let’s say your business premises’ rateable value was £13,500, then you’d receive 50% off your business rates bill.
What if I have multiple restaurants?
You may still be able to claim relief if you have multiple properties. If you take on a second premises after the 27th of November 2025, you can now keep the relief on your main property for an extended 3-year grace period.
After that, you’ll still qualify as long as each additional property has a rateable value of less than £2,900, and the combined rateable value of all your properties is under £28,000 (or £20,000 outside of London).
In simple terms, the higher your business’s rateable value, the less you’ll be able to claim.
Navigating these deductions can be complex, which is why many restaurant owners choose to work with an accountant.
Finding an accountant in London
A qualified accountant will be able to guide you through the process and ensure you’re operating in the most tax-efficient way possible.
When assessing a potential accountant, you’ll want to look for credentials or qualifications listed after their name, within their email signature, or on their LinkedIn profile.
For example, you could look for a Chartered Certified Accountant (commonly abbreviated as ACCA) – it’s worth doing because the term ‘accountant’ isn’t regulated.
You should also consider whether you’d be fine with a generalist accountant who knows a little of everything, or a specialised accountant with in-depth knowledge in your chosen field. For example, if you run a restaurant in London, look for an accountant with specific knowledge of London borough rates, property valuations and local rate reliefs.
For extra peace of mind, you can browse reviews and comparison pages to give yourself a better idea of what a particular accountant is like to work with.
Online vs traditional
One other thing you will have to decide is whether to enlist the services of an online accountant or go the more traditional route.
An online accountant is the same as any other type of accountant, except you talk to them online, over the phone, or via video calls.
If you’re a busy restaurant owner, this is obviously much more convenient than meeting up with your accountant in person during office hours (which isn’t always practical when you’re delivering a service!).
At the same time, though, you may be someone who really values face-to-face interactions and wants a more personal touch – it’s all about what you think is best for your business.
Find more help with accounting and finance for your London-based business in our information centre.
