British pubs 2nd-highest for business rates
The UK Chancellor’s failure to extend retail relief for a further year is effectively a £1,500 tax increase for the majority of pubs there and it will add £46 million to pubs’ rates bills.
25 November 2015 | 0
So stated the British Beer & Pubs Association’s Chief Executive Brigid Simmonds in reaction to the British Chancellor’s Autumn Statement, published today.
Tax including business rates takes up some 34% of a pub’s turnover in the UK with every pub in the country paying an average of £140,000 towards the total tax bill of £7.3 billion, says The average British pub’s costs and tax contribution; sectoral comparisons, a new report from Oxford Economics for the BBPA.
As a result, Britain’s pubs carry one of the heaviest tax burdens in the UK economy.
The full report shows that the industry’s total tax bill amounts to £7.3 billion or £140,000 for every pub.
In the report, Oxford Economics concludes that, “the pub industry was found to have a tax burden which was larger than a large proportion of the sectors studied in this report.”
VAT, excise duty and business rates are the main burdens.
Along with beer duty, the bill for business rates has been causing pubs particular problems. Rates are intended to reflect the rental value of properties. For pubs this is based on their expected turnover. However the current valuations are based on 2008 trading performance.
As pubs have struggled, this has led to them being massively overburdened, paying six times (at £600 million) more than they should be paying per year if their bills were to be in line with sales. Indeed the Oxford Economics report finds that in terms of per pound of turnover, pubs pay the second highest business rates bill of the 67 sectors studied.
Prior to the Autumn Statement the BBPA, along with other trade associations, wrote a joint letter to the Chancellor calling for a range of immediate reliefs on business rates in today’s Statement.
“This new report sets out the stark reality of the disproportionate tax burden bearing down on pubs,” commented Brigid Simmonds, “Without action to reduce this burden, more of our much-loved community pubs will be under threat. The Chancellor has taken action on beer duty and to relieve the burden of business rates on pubs in his previous two Autumn Statements, but there’s no doubt that more relief and reform is needed.”
However it wasn’t forthcoming in today’s announcement.
Having expressed her disappointment about the lack of movement on rates, Bridgid Simmonds continued, “The extension of Small Business Rate Relief for another year is welcome and is worth £25 million and is something we had specifically requested. One-third of pubs will qualify, 15,000 premises, in total.
“Retail relief was providing a discount for pubs with a rateable value of £50k or less, which is 75% of all pubs. This is a particular problem in the run-up to the revaluation in 2017 as rates bills have become out of kilter with the value of individual businesses.
“Britain’s pubs face a total tax bill of £7.3 billion per year so we will be keeping up the pressure for further measures such as more action on both beer duty and business rates as we move towards the Budget in March.
“I do welcome the announcement that small businesses like pubs will typically not be burdened with the Apprenticeship Levy as this would have placed an excessive burden on what are mostly small businesses. It is crucial that the Levy system is straightforward and allows those that pay into the Levy fund to access their full contribution to support apprenticeships.
“I also welcome the £40 million for Visit England to fund product development, given the vital role that pubs play in the wider tourism industry.”
Amongst other things, the joint letter from beer and pub industry bodies to the Chancellor had called on the Government to:
Freeze the business rates multiplier, benefiting all pubs and worth around £5 million to the sector
Extend small business rate relief for another year, benefitting a third of pubs or 15,000 pubs
Apply Retail Relief for another year – a scheme that provides a discount for pubs with a rateable value of £50k or less – and increase the discount to £2,000 per annum, per pub.