Pubs face huge tax raid risk as multiple closures could hit UK boozers

Closed pub sign
-Credit: (Image: Getty)


The nation's struggling pubs are facing a potential tax bombshell that could increase business rates for local watering holes by as much as £11,000 a year from spring. Industry leaders warn that the hospitality sector is bracing for a fourfold increase in annual bills due to the impending end of business rates relief, unless the government intervenes.

Trade body UKHospitality estimates that the total additional cost to pubs, restaurants and hotels could reach £928 million a year, threatening closures, job losses and price hikes. The group warns that a local pub could see an increase of £11,000, a town centre restaurant an extra £30,000, and a seaside hotel could face a rise of £40,000.

The organisation is urging the Chancellor to introduce a new lower, permanent and universal rate for hospitality's business rates at the Budget on October 30. Its chief executive, Kate Nicholls, said: "Hospitality businesses are facing a devastating cliff-edge next April, when many will see their bills quadruple.

READ MORE:Have your say! Do you think Sir Keir Starmer will save the NHS?

READ MORE:Family homes could be hit under massive £2 billion tax raid plan

"The scale of this almost billion-pound tax bombshell is just not viable. Many will face risk of closure, be forced to let people go to stay afloat, or shelve their investment plans. None of those outcomes are good for the people we employ, the communities we serve, or the economic growth the Government wants to deliver.

"The scale of this almost billion-pound tax bombshell is just not viable. Many will face risk of closure, be forced to let people go to stay afloat, or shelve their investment plans. There has to be a solution that avoids this cliff edge, and a lower, permanent and universal multiplier for hospitality would deliver that. Not only would it give certainty and stability to businesses, but it would allow the Government to begin delivering on its own manifesto commitment."

She highlighted the risk of closures, stating: "The dangers of not acting are stark whether you're a pub, coastal hotel or soft play centre for kids and families. At the Budget, the Chancellor can choose to act and take the brakes off the sector's growth by avoiding this cliff-edge. I hope she does just that because inaction could be fatal for many businesses."

Business operators across the board have voiced concerns about the harmful impact the end of relief without an alternative solution would have on their investment plans, business viability, and the communities they serve. Safari Play Venues, a small family-run business operating two soft play venues in Milton Keynes and Peterborough, is one such example. Its owner, Gordon Forster, revealed that business rates already account for up to 10 percent of their turnover and they would be facing an additional £95,000 in rates if relief ended without a solution.

Empty wine glasses and stools on a pub table
The hospitality sector faces the quadrupling of annual bills due to the end of business rates relief -Credit:Getty

He stated: "Business rates support has allowed us to keep trading, keep employing staff and keep paying taxes all positively supporting the Government finances. The scale of this almost billion-pound tax bombshell is just not viable. Many will face risk of closure, be forced to let people go to stay afloat, or shelve their investment plans."

He continued: "Not addressing business rates could destroy many hospitality and leisure businesses. We have Covid loans to pay and we put everything on the line to survive, including our house. The Government must avoid a business rates cliff edge that will cost jobs, investment and community wellbeing. It'll also impact on the mental health of business owners who will suddenly have to find tens of thousands of pounds."

Roxane Marjoram, co-owner of several pubs in and around Suffolk with her husband David, expressed her fear over the potential quadrupling of rates bills, stating it fills her "with dread". She said: "A quadrupling of rates bills, if the current relief ends, will fill all small operators like us with dread. Even though we're operating in an environment with significantly higher costs post-Covid, pubs and restaurants like ours can and will play a strong part in economic recovery going forward, if we're supported with fair rates bills. A new lower, permanent and universal business rates multiplier for the whole sector, as proposed by UKHospitality, will help give us much-needed certainty looking forward."

Tim Hassell, who manages the Thurlestone Hotel in Devon, revealed he would have to find £110,000 if relief ended in April. He said: "In a year when we have seen a drop in demand and extra costs on almost everything, we have seen profits drop to break-even point. A huge rise in our business rates bill would have a massive impact, particularly on our investment plans.

"The current business rates system unfairly penalises property-based businesses like ours. It's in dire need of reform."