Autumn statement

Licensees 'distraught' after extra tax burden is revealed

03-Dec-2015 - Last updated on 03-Dec-2015 at 14:32 GMT

Licensees have reacted angrily to the news that three quarters of pubs will have to stomach an extra £1,500 a year tax burden, which could be the tipping point “between life and death” for many businesses.

The industry has been rocked by chancellor George Osborne’s decision not to extend retail relief on business rates for a further year in last week’s Autumn Statement. The relief provided a discount for pubs with a rateable value of £50,000 or less — some 75% of all pubs. It will now end in March 2016.

'It's take, take, take'

Steve Haslam, founder of TLC Inns, said the move meant there was yet another tax burden for the trade to pay. “With the added cost of the national living wage, it’s going to be thousands of pounds a year. We thought that rates relief was the one thing the Government was giving to pubs. It’s just take, take, take,” he said.

Paul Egerton, licensee at the Jolly Sailor, St Albans, Herts, added: “Pubs need as much help as they can get. Everywhere you turn, pubs are closing. The rates relief was essential.”

The Chancellor’s statement did have good news for some licensees; small business rates relief was ex-tended for another year, covering about a third of pubs. And the apprenticeship levy will only apply to large businesses with wage bills of more than £3m per year.

Meeting with Osborne

Following the statement the Save the Pub group secured a meeting with Osborne to discuss reducing business rates.

In the House of Commons on 2 November, chair of the group Greg Mulholland MP called on the chancellor to discuss the 'unfair' amount British pubs currently pay. He argued that pubs have 0.5% of British turnover, but pay 2.8% of business rates.

Many were hoping for Osborne to announce more drastic changes in rates to benefit pubs in his autumn statement, and claim the removal of retail relief outweighed any positives.

'Distraught'

Jerry Schurder, head of business rates at property agent Gerald Eve, said: “Publicans and restaurateurs will be distraught this relief has been removed. It is the smallest and most vulnerable that will be affected most. The £1,500 could be the difference between the life and death of the business.”

Damon Horrill, founder of Cornerstone Inns, said: “Many pub businesses, especially in the tenanted pub sector, are on the brink. Business rates are the biggest tax and must reflect profitability. The scrapping of the retail discount together with rises in labour costs will hit operators hard, many of whom are at tipping point. Any cost increases will make pub agreements less workable.”

Peter Borg-Neal, chief executive of Oakman Inns, added: “Arguing about the types of business rates relief is to miss the point. We need to get on with a new structure that delivers fairness without the need for a complex myriad of concessions.”

Undermines training

The Association of Licensed Multiple Retailers warned the tax could have the effect of distorting payroll costs further and was likely to undermine in-work investment and staff training.

The British Beer & Pub Association said Britain’s pubs now face a total tax bill of £7.3bn per year and will press for Government help.