UK spending review a mixed result for pubs

Pubs will benefit from the extension of small business rate relief for another year following Osborne’s autumn spending review, but the end of the retail relief scheme will cost the trade £46 million, says the British Beer and Pub Association (BBPA).

Announcing his autumn statement yesterday, Chancellor George Osborne confirmed the extension of Small Business Rate Relief for another year, worth £25 million, which will benefit around 15,000 premises. The move was welcomed by the BBPA, however it criticised Osborne’s decision not to extend the Retail Relief scheme for a further year, which it says will cost the industry £46 million.

“It is very disappointing that the Chancellor has not extended retail relief for a further year – this is effectively a £1,500 tax increase for the majority of pubs, and will add £46 million to pubs’ rates bills”, said BBPA Chief Executive Brigid Simmonds.

“Retail relief was providing a discount for pubs with a rateable value of £50k or less, which is 75% of all pubs. This is a particular problem in the run-up to the revaluation in 2017 as rates bills have become out of kilter with the value of individual businesses.”

Earlier this week the BBPA published a report carried out by researchers from Oxford Economics in the pub industry, which revealed the industry’s yearly tax bill to be £7.3 billion, with each premises paying an average of £140,000 in tax every year. In terms of the total tax bill, “costs were £800m larger than the ‘gambling and betting’ sector”.

Along with beer duty, the bill for business rates was blamed for the industry’s hefty tax burden. Rates are intended to reflect the rental value of properties, which for pubs is based on their expected turnover. However, the current valuations are based on 2008 trading performance, researchers said, who argued that pubs should only be paying £100 million per year in business rates – six times less than they currently do.

It follows a letter written to the chancellor earlier this year, co-signed by pub industry bodies such as the BBPA and the Society of Independent Brewers (SIBA), which called for immediate reliefs on business rates in this week’s Autumn Statement. Measures included freezing the business rates multiplier, extending small business rate relief for another year, and retail relief – a scheme that provides a discount for pubs with a rateable value of £50k or less.

Osborne granted one of their requests, extending the small business rate relief for another year, and also imposed a levy on businesses employing apprentices in a bid to raise £3 billion a year to fund three million apprenticeships by 2020. Large employers using apprentices will have to pay a tax amounting to 0.5% of their total wage bill from April 2017, however companies with a wage bill below £3 million will be exempt, meaning fewer than 2% of UK employers will be affected.

“Britain’s pubs face a total tax bill of £7.3 billion per year, so we will be keeping up the pressure for further measures, such as more action on both beer duty and business rates, as we move towards the Budget in March”, added Simmonds.

“I do welcome the announcement that small businesses like pubs will typically not be burdened with the Apprenticeship Levy, as this would have placed an excessive burden on what are mostly small businesses. It is crucial that the Levy system is straightforward and allows those that pay into the Levy fund to access their full contribution to support apprenticeships.”