Stamp duty proposal may bring tax hike for licensees

Licensees who lease their property could be facing massive charges if plans to reform stamp duty are passed.​ A proposal put forward by the government at the end of last year says licensees should pay according to the length of the lease rather than one year's average rent.

This could result in the cost of a lease going up by tens of thousands of pounds, forcing many licensees out of business and discouraging many new licensees from buying into their first pub.

It could also have an effect on the major tenanted pub companies who would be forced to increase the price of their leases to cover the extra charge.

When the government put forward its proposals to reform the tax on leases, it was greeted by such outrage by the property industry that it was forced to withdraw them.

It promised that it would look again at its document called Modernising Stamp Duty and would come back for further consultation.

But many in the trade are fearful that the government is looking to put the reforms into its new Finance Bill in April and it will be too late for them to be consulted.

The British Beer & Pub Association (BBPA) has been lobbying the government and has written to it asking for a consultation.

Rob Hayward (pictured)​, chief executive of the BBPA, said: "The government has come up with a system that could increase the duty on a lease 10-fold.

"Licensees could now be facing increased costs of tens of thousands of pounds per lease agreement.

"It would be a deterrent for new people entering the industry."

Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations agrees.

He predicts additional costs on a lease of £24,000 or more. He said: "People won't have the cash to buy a lease in the future. It will mean a lot of people cannot come into the trade.

"We are hoping that the government will see sense as it will put a lot of small companies out of business."

Barry Gillham, chairman of property agent Fleurets, predicts it will lead to huge price rises on leases. He said: "Effectively it will have a very hard hit on the tenanted pub companies and the tenants."

Unique pub company is opposed to the tax increase and has already made representations to the treasury expressing its opposition.

An Inland Revenue spokesman confirmed that the document was still under consultation and the government is considering all submissions received from property specialists and the pub trade.