In his statement in the House of Commons the Chancellor of the Exchequer, George Osborne, delivered a permanent small business rate relief to those with rateable values up to £15,000, up from the previous upper limit of £6,000.
Estimates suggest around 75% of pubs will benefit from the changes to business rates, with a pub on a rateable value of £50,000 saving £625 per year from April 2017, and pubs with rateable value of less than £12,000 paying no business rates at all.
Other key announcements in the Budget included:
- A freeze in the duty rate for beer and cider
- A levy on the makers of sugary drinks, aiming to raise £520m and reduce obesity
- 0% commercial stamp duty on purchases up to £150,000, 2% from £150k-£250k and 5% on purchases worth above £250,000.
- Corporation tax will be cut to 17% by April 2020
- Business rates increases will be based on CPI rather than RPI
Keeping pubs open
The Campaign for Real Ale said reductions in stamp duty and business rates will help to keep small community pubs open.
Chief executive, Tim Page,said: "The sustainability of smaller community pubs has been boosted by welcome decisions to cut commercial stamp duty and the business rates paid by small businesses.
"The extension of small business rate relief will save publicans of smaller pubs thousands of pounds annually which will help keep community pubs as viable businesses.
"Likewise, cuts in commercial stamp duty will reduce the financial barriers faced by people looking to purchase small community pubs to keep them open and serving the needs of local people.”
Beer duty freeze
The freeze in beer duty follows a hat-trick of 1p cuts, and comes despite the British Beer and Pub Association’s and CAMRA's call for a fourth consecutive reduction.
Page claims claims the freeze represents a missed opportunity.
“With UK drinkers paying the second highest rate of beer duty in Europe, a beer tax cut was needed to keep pubs open," he added.
Government 'must do more'
But the Association's chief executive Brigid Simmonds remained optimistic. She said: “This freeze means that beer duty is now 17 per cent lower than it would have been, had the Chancellor stuck with the escalator policy.”
She said the Chancellor’s actions show a commitment and concern for brewing and pubs, as beer is 20p cheaper in pubs than it would have been under the escalator.
But Government ‘must do more’ to help pubs which will face added costs in the coming months from the living wage, the apprenticeship levy and auto enrolment pensions, Simmonds argued.
The Association of Licensed Multiple Retailers warned that the sugary drinks levy may be passed down to pubs and called for more decisive and meaningful action to help the industry.
Chief executive Kate Nicholls said: “We need confirmation that the tax on sugary drinks will be a true levy on producers and not a sales tax that will increase costs for retailers.
“Extension of small business rate relief is a welcome first step in reducing rates burdens for businesses, but more needs to be done to address a system that currently sees pubs and bars paying 15 pence per pint in rates compared to about 1 penny per pint in supermarkets.”
David Forde, UK managing director of Heineken, was pleased not to see a beer duty hike, but “disappointed” not to see a fourth successive cut.
He claimed an increase would have undone the benefits of previous cuts.
“The fact remains that pubs already pay 34p in every pound of turnover in tax, shoulder one of the highest business rates burdens of any industry and face rising wage bills,” he said.
“Duty cuts on beer and cider would have helped to reduce these pressures.”
The Society of Independent Brewers Association said the beer duty freeze is good news for independent craft brewers.
Managing director Mike Benner argued the three successive cuts have “revitalised” British beer.
“Around 300 new craft breweries have opened since 2013 bringing thousands of new local beers for consumers to enjoy. Our members are typically confident about the future of their businesses and this move will help reinforce that and encourage greater investment," he said.
Molson Coors welcomed the beer duty freeze, but managing director Frederic Landtmeters said there is “some way to go” to secure long-term sustainable growth which would benefit publicans and brewers.