Hospitality firms in and around Winchester and Romsey could be facing the most arduous financial challenges since the pandemic.

The sector, including food and beverage, accommodation, travel and tourism, and entertainment and recreation, is particularly vulnerable to a range of Autumn Budget measures because of a younger workforce, recruitment problems and reliance on discretionary spending by consumers.

Employer National Insurance Contributions (NICs) will increase this April by 1.2 per cent to 15 per cent.

The national living wage for people aged 21 and over and the national minimum wage for people of at least school-leaving age will also go up.

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Employment tax adviser at Azets Joanna Gander said that the changes could prove too much for some employers (Image: Azets) Joanna Gander, a local employment tax adviser at Azets, said: "It is difficult to convey just how difficult these mandatory rises will be for many firms in the regional hospitality sector.

"There are a lot of cold-sweat calculations going on behind the scenes as businesses work out what their new higher breakevens will be – and what needs to be done to recoup the higher outlays from April without hiking prices for weary customers who already tightened belts when inflation hit a 41-year high just two years ago."

According to industry figures, hospitality is the third largest employer in the UK, with 3.5 million people working in the sector.

The national living wage will rise on April 1 from £11.44 to £12.21, an increase of 77p which will also increase both employer and employee pension contributions for affected workers.

Ms Gander added: "These increases, at the same time as the rise in employer NICs and higher corporation tax on profits, will quickly erode already-squeezed profit margins and could break the camel’s back for some employers."

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The hospitality sector was already under pressure, with 3,712 insolvencies relating to accommodation and food service activities alone in England and Wales in the 12 months up to August.

Ms Gander added: "Thankfully, there are proactive measures employers can take to reduce the cost impacts. We estimate that companies which utilise salary sacrifice, sometimes referred to as Pension Salary Exchange (PSE), can reduce the NIC impact costs by between 20 per cent and just over 40 per cent, depending on salary level.

"The sooner PSE can be introduced, the sooner the savings can begin to mitigate the impact of the NIC increase."