Shaun McManus, licensee at Teal Farm Pub in Washington and founder of StockTap, said about £1.31 of a £4.90 pint in the north-east goes to the Treasury before operators pay for beer, staff or utilities.
Join our WhatsApp channel: The Morning Round-Up
Get the biggest pub trade stories straight to your phone. Listen to our one-minute daily news briefing and receive breaking news, exclusives and sector updates throughout the day....just remember to turn notifications on in top right corner!
The figure is based on The Morning Advertiser’s (MA) own pint survey, which put the average price of a pint in the north-east at £4.90.
McManus said the same calculation on a £5.34 pint would equate to about £1.39 in tax, including VAT and draught duty.
He told The MA: “In practice it means the Treasury is my biggest supplier. A wet-led local doing 800 pints a week is handing over about £1,100 a week in VAT and draught duty before the beer, the staff or the electric get paid. Nobody sends an invoice for it, it just leaves inside the price of every pint.”
Tax on tax
McManus said the duty element “barely moves” between different pint prices, because beer duty is charged on the product rather than the pub’s selling price.
He added: “On a £4.90 pint, it’s still about £1.31 to the Treasury, because the duty is the same 50p whatever the pub charges.”
He also argued the structure of VAT meant pubs were effectively paying “tax on tax”.
“It winds people up more than the total does. VAT is charged on the full selling price, and the duty is already inside that price, so roughly 10p of the 89p VAT on an average pint is VAT charged on the duty. Tax on tax, in the plainest sense.”
Budget asks
Ahead of the Budget, McManus said a freeze in beer duty would avoid adding further cost to each pint, while a VAT cut would have a larger impact for operators.
He said: “February’s 3.66% duty rise added about 2p a pint on a standard lager, so a freeze means not doing that to us again, call it £15 a week protected for a pub my size.
“A VAT cut is the bigger lever: each point off is worth getting on for 4p a pint if prices hold, so about £30 a week per point for a wet-led local doing 800 pints.”
Asked what single measure he would choose, McManus said: “Cut draught duty. A VAT cut helps every hospitality business, but draught relief is the one lever that only lands in pubs, because it can’t follow the beer into a supermarket fridge.”
McManus said trading remained challenging, although Teal Farm Pub had benefited from “a great set of locals” and events.
He added: “It’s a little more than difficult, especially with Marston’s setting my prices, which they believe are right for the area, even though they are among the highest around. We are lucky to have a great set of locals and good events that keep them coming back.”
