Well, we’re at the end of May already, and what a big and busy month it’s been for the United Kingdom!

With Summer about to get into full swing, here’s all the business and tax news from the last month…

Coronation Causes Revenue Boost

The Coronation of King Charles III on May 6th , 2023, gave the economy a significant boost based on data received by SumUp.

Whilst official figures are yet to be released, SumUp’s figures suggested that entertainment venues received an increase of 65.5% in revenue, fast food restaurants received a 17.1% boost and food trucks saw a 37.3% increase. Bars and clubs saw revenue increase by 36.4%, and restaurants and cafes revenue’s increased by 21.2%.

After what was a challenging winter for businesses, it’s likely that official figures will show a positive outlook for many businesses, specifically those based in London, due to the Coronation and the Bank Holiday weekend that came with it.

IMF Say Britain No Longer Faces A Recession

The International Monetary Fund has reported that Britain is no longer set to face a recession in 2023.

It has predicted that GDP is set to grow by 0.4%, thanks to the Government’s efforts to tackle inflation. Inflation is set to fall to 5% by the end of 2023, with the 2% target still expected to be hit on target in 2025. The economy is also expected to see growth over the next  two years.

Help For Households Payment

The Government’s ‘Help For Households’ scheme saw one million families receiving tax credits receive their cost of living payment for the 2023 to 2024 tax year.

Families received £301 automatically between the 2nd and 9th May, which is the first of three payments totalling up to £900 for eligible families.

John Glen, the Chief Secretary of the Treasury said: ‘Higher prices make life difficult for everyone, which is why our priority is to halve inflation this year.

But we are also going further to support those struggling most, with a total package of support worth an average of £3,300 per household this year and next – including up to £900 in direct cash payments starting next month for families receiving tax credits.’

Higher-Rate Tax Payers Set To Increase In The Next 5 Years

The IFS have predicted that by 2027, 1 in 5 taxpayers will be paying income tax at 40% or more, with 1 in 4 of these being teachers. 

This has nearly quadrupled the share of adults paying this rate of tax since the early 1990’s, with the six year freeze to income tax introduced in April 2022 set to play a significant role.

This will see the some of the highest rates of income tax affect a larger majority of the population instead of the countries very top earners.

Isaac Delestre, Research Economist at IFS, said: ‘The freeze to thresholds is […] pulling an additional 2.5 million more people into paying rates of 40% or more by 2027–28. Whether or not the scope of these higher rates should be expanded is a political choice as much as an economic one but achieving it with a freeze leaves the income tax system hostage to the vagaries of inflation – the higher inflation turns out to be, the bigger impact the freeze will have.

Inflation Has Fallen

The UK’s inflation rate has fallen to 8.7%, which is the first time the rate has been in single figures since August 2022.

This however doesn’t mean that inflation will see a fast decrease in prices – specifically food prices – they will instead rise less quickly.

Food prices remain at 19.1% higher than 2022, with eggs, olive oil and spices recording the largest annual price rises, with core inflation rising to a 31 year high of 6.8%.

Eurovision See’s Huge Tourism Boost To Liverpool

Finally, the Eurovision Song Contest came to Liverpool this month, ending on the 13th May with the Grand Final.

However, it wasn’t just the week of Eurovision that saw a tourism boost for Liverpool. In the two- weeks leading up to the contest, Liverpool saw 500,000 people travel to the city centre – 400,000 more than predicted – with NatWest forecasting that businesses in the centre could have benefitted from up to £200m in revenue. Further forecasts suggest that those visiting for the day could spend up to £12m, with overseas visitors equating for £28m in spending. Individuals visiting the Eurovision Song Contest are often expected to spend around £400 each, based on previous data from past contests.

Liverpool ONE saw an average growth of 32% compared to May 2022, with some days reaching increases as high as 53%. 680,000 people are reported to have visited Liverpool ONE during the Eurovision period.

The CACI, the consumer and location intelligence specialist, calculated that consumers spent £19.9m in Liverpool ONE during the Eurovision period, with restaurants seeing a 78% increase in sales, growing to 87% on the day of the final.

That’s all the news from May 2023! As we look towards Summer, make sure you keep an eye on the news for any updates in the business and tax world. Have a great June!