autumn budget 2021

‘Devil will be in the detail’ of business rates changes

By Nikkie Thatcher contact

- Last updated on GMT

Chancellor update: the Budget was announced in the House of Commons by Rishi Sunak (image: Getty/PeopleImages)
Chancellor update: the Budget was announced in the House of Commons by Rishi Sunak (image: Getty/PeopleImages)

Related tags: Business rates, Property, Legislation, ukhospitality, Greene king, Punch pubs, British beer & pub association, Siba

The trade has reacted to the Budget announcement of hospitality businesses being set to receive a 50% discount on business rates bills for one year.

Chancellor Rishi Sunak revealed yesterday​ (Wednesday 27 October) the reduced rate will be up to £110,000.

He said: “Any eligible business can claim a discount on their bills of 50% up to a maximum of £110,000. That is a business tax cut worth almost £1.7bn.

"Together with small business rate relief this means that over 90% of all retail hospitality and leisure businesses will see a discount of at least 50%."

Punch Pubs & Co CEO Clive Chesser welcomed the recognition of pubs from the Chancellor in his Budget speech.

Chesser added: “The 50% business rates discount for one year, and the cancellation of next year’s increase in the rates multiplier, is also positive news and is further acknowledgement of the challenging circumstances the sector is still facing as we cautiously navigate our way out of the crisis.

“The announcements represent an important step in the right direction but continued and sustained long-term support continues to be absolutely vital.”

Positive news

The Budget updates were a vote of confidence in the sector as it faces an uncertain winter, labour disruption and rising costs, Greene King boss Nick Mackenzie said.

“Creating a draught rate and simplifying the duty system is positive news for our 2,700 pubs and the communities we serve across the UK.

“We welcome the efforts to reduce the burden of business rates for our tenants and small operators, but the cap on the 50% discount means there will be little benefit for medium and large pub-owning businesses.

“The long-term health of the UK’s pubs still demands fundamental reform to lower the day to day cost of running a pub.”

Trade body UKHospitality stated it had been lobbying hard for a significant reform of the “outdated” business rates system.

Chief executive Kate Nicholls said: “[We] therefore very much welcome the Chancellor’s move to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year.

“The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.”

Huge dampener

Pubs pay 2.5% of business rates, despite accounting for just 0.5% of rateable turnover, estimated to be an overpayment of £570m, according to British Beer & Pub Association (BBPA) chief executive Emma McClarkin.

She added: “Cancelling the rates multiplier and cutting rates for pubs by 50% for one year is a much-needed boost to our sector in its fragile recovery. 

“The 50% cut to business rates alone will save pubs £169m. However, the cap of £110,000 per business is a huge dampener and means a significant number of pubs will not benefit from the relief at all. 

“The multiplier freeze will save English pubs £32m. The announcement that business rates revaluations will happen more frequently is also welcome, as is the one-year improvement allowance. 

“However, we remain concerned that for the longer term the inherent unfairness of the business rates system for pubs has not been addressed.”

The cut for business rates bills is hugely beneficial for hospitality businesses, said The Society of Independent Brewers (SIBA) chief executive James Calder, before calling for the definition of those premises to be expanded and cover all breweries, taprooms, bars and pubs.

Carlsberg Marston’s Brewing Company CEO Paul Davies said: “A one year 50% business rates reduction for the hospitality sector will also be widely welcomed, and comes at a pertinent time, with potential Covid-19 restrictions looming.”

Related topics: Property law

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