Higher business taxes to cost pub sector £150m and threaten jobs – analysis

Pubs are facing steeper business taxes that could cost the sector an extra £150 million and threaten thousands of jobs, new analysis suggests.

Firms will end up paying more despite business rates being lowered in the Budget, industry bosses are warning.

This is because they are facing a cut to existing tax relief next year, coupled with revaluations that could push up how much pubs can be taxed.

New analysis from the British Beer and Pub Association (BBPA) estimates that higher bills will cost the industry an extra £150 million – the equivalent to 12,500 jobs.

The BBPA calculated that bills will rise by £3,867 for the average small pub from next year, and by £11,085 for the average medium-sized pub.

Emma McClarkin, chief executive of the BBPA, said pubs across the country “are anxiously doing the sums and many will now see their bills will dramatically go up, not down, despite the impression the Budget gave”.

“The new lower multipliers combined with the loss of the existing relief will not counter the huge increase in rateable values,” she told the Press Association.

In the Budget, the Government confirmed a current 40% discount for retail, hospitality and leisure businesses – which is capped at £110,000 per business – will end on March 31 next year.

This will be replaced by a new system from the next financial year, which will see rates multipliers for retail, hospitality and leisure firms set 5p lower than the standard rate with no cap in support.

Rachel Reeves said it would be the “lowest rates since 1991” and would be paid for through higher rates on properties worth more than £500,000 – including the warehouses used by “online giants”.

Discount

However, the discount is less generous than the 20p reduction it could have been, industry groups say.

And analysis since Wednesday’s Budget has indicated that the change, combined with an increase in rateable values for most pubs, will result in a sharp annual increase to bills.

Separate calculations by industry group UKHospitality found that the average pub’s business rates, even with the reduced multiplier, will increase by 15% next year – amounting to an extra £1,400.

By 2027-28, the average pub’s rates will be £4,500 higher than today, and by 2028-29, they will be £7,000 higher, according to its analysis.

Kate Nicholls, chair of UKHospitality, said plans in the Budget were “quickly unravelling”.

“We repeatedly warned the Treasury ahead of the Budget that hospitality would be uniquely impacted by significant increases to rateable values, due to the pandemic impacting previous valuations,” she said.

“The Government can solve this issue. I’m certain they did not intend to provide online giants, office blocks and out-of-town supermarkets with a better deal than local pubs, neighbourhood restaurants and coastal hotels.”