Thousands of pubs to get £1k discount on business rates

Chancellor of the Exchequer Sajid Javid announced the news over the weekend (Saturday 25 January) and it was predicted as many as 18,000 pubs are expected to benefit from the discount.

The relief is on top of an extended retail discount, which smaller pubs are also eligible for, and those qualifying for both will get up to £13,500 off their annual bills.

Pubs with a rateable value of below £51,000 already get a third off their rates bill through the retail discount and the new £1,000 discount is in addition, and will apply after the retail reduction.

The pubs relief is part of a number of measures the Government is intruding in a bid to support local high streets.

From April, small shops and cafés will see bills halved as the retail discount, currently a third off, is extended to 50%.

Music venues and cinemas will also be eligible for the retail discount, alongside a £1,500 discount for local newspapers office space being extended for a further five years.

The Government said in 2020 to 2021, it will increase the existing business rates retail discount, which includes pubs, to 50% and include live music venues with a rateable value of up to £51,000.

Changes announced

All reliefs are, however, subject to state aid limits imposed by the EU, which restrict the support available to any business to €200,000 (about £168,600) over a rolling three-year period.

Javid said: “Thousands of pubs will get £1,000 off their rates bill this April, thanks to the changes we are announcing.

“These will mean lower rates for the small independent shops, cafés and locals at the heart of our communities, as well as for the local papers that are a vital pillar in local democracy.”

Communities pubs minister Luke Hall said the cut continued the Government’s commitment to support pub owners.

He added: “Pubs are front and centre of communities around the country, the key to thousands of jobs and providing a meeting point for local residents to get together and enjoy a pint.”

UKHospitality CEO Kate Nicholls called the announcement fantastic news for pubs and other high street businesses that are taking too much of the pain from business taxes.

“The economy has evolved and the tax system needs to catch up. Taxing property higher than the rest of the developed world is a recipe of the decimation of our high street and communities, which we have already started to see,” she added.

“At the Budget in March, we need to see drastic action to cut the cost of running a business, regardless of size.

“Costs are on the rise, particularly with the planned 6.2% increase in the national living wage in April. We will be proposing a range of measures, including further cuts in business rates for all hospitality businesses and a cut in employment taxes to support firms in delivering take-home pay.”

Important step

British Beer & Pub Association chief executive Emma McClarkin outlined how pubs were the heart of the community and hailed the news as great.

She added: “On business rates alone, pubs pay 2.8% of the business rates bill, despite accounting for just 0.5% of turnover.

“Reducing rates for pubs is an important step in the right direction. Such reliefs are vital until the fundamentally unfair system is overhauled.

“However, some large pubs and those subject to state aid restrictions, will be unable to claim this relief. Once the UK leaves the European Union, the Government should look at reform of the state aid rules.

“It is also important local authorities work to ensure these reliefs are as simple to claim as possible. Given that seven in 10 alcoholic drinks sold in a pub are beer, the most direct way of helping all pubs is to cut beer duty.”

Real estate adviser Altus Group said the announcement meant 5,431 pubs who did not qualify for the relief and “receive no assistance towards their bills” will now be eligible for a £1,000 discount but Government measures will continue to be subject to EU rules, which it claimed restricts state aid to €200,000 (about £168,600) per business over as three-year period.

Altus Group head of UK business rates Robert Hayton said while any initiatives taken to reduce the burden of business rates were warmly welcomed and great news for operators, he also said most large pub chains would have reached the cap this current financial year and will effectively be precluded.

The adviser also said pubs in England and Wales have paid £749.88m in business rates for the 2019-20 financial year, a rise of £116.59m compared to the 2016-2017 financial year, which was the final year before the revaluation came into force.