UK pubs 'need to triple usual sales to pay off huge new tax bills' warn experts

22 October 2023 , 08:35

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The Average Arms would have to sell 50,000 pints more a year to cover the increased business rates (Image: In Pictures via Getty Images)

British pubs are facing fresh closure fears, following new data suggesting business rates will rise by £2 billion in April next year. Estimates by advisory group Altus forecast that pubs’ annual taxes will jump from £3,900 to £16,800.

Cost increases on this scale have the potential to be catastrophic for many businesses, as many of them are small, independent and reliable on low-value transactions with poor margins to turn a profit.

If their costs are to rise by this much then the number of pints sold would need to "double or triple" to keep them afloat, according to Campaign for Real Ale (CAMRA) chief executive Tom Stainer.

Pubs will need to sell many more of these if they want to survive a new brutal tax (Bloomberg via Getty Images)

Tom told the Daily Star: "Being conservative, let's say pubs on average face a £10k hike in business rates next year. Again, broad averages to keep the maths simpler, but let's estimate a pub makes 20p profit on a £5 pint after costs."

"The Average Arms would have to sell 50,000 pints more a year to cover the increased business rates – that's around 130 pints a day, assuming it's open seven days a week, for the whole year."

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He said that CAMRA and other industry leaders were calling for an extension of the current business rates relief.

"Pubs are still struggling to replenish reserves exhausted during lockdowns or repay loans they took on to survive," he added.

"They're facing the impossible choice between passing on increasing costs to customers already struggling with their own cost of living, or absorbing the costs themselves and risking the business becoming unviable. These pressures risk forcing more and more pubs to consider closing their doors for good."

Greg Mulholland, campaign director at Campaign for Pubs, echoed his concerns about the possible rate hikes.

He explained to The Star: "Publicans are already concerned at the possibility of an end to business rates relief this year, with the serious pressures of the cost-of-living crisis on both pubs and pub customers following on from the Covid pandemic and lockdowns."

“However, I suspect selling an additional 130 pints a day could be doubling, or tripling, some pubs' average sales – which considering that's the sort of increase you only ever see during World Cups and other big sporting occasions, is simply not realistic.”

He added: "It is simply unthinkable that pubs could be hit with a quadrupling of business rates, so the Chancellor needs to make clear as soon as possible that this will not happen. It’s also high time Jeremy Hunt listened to the unanimous calls from the whole of the sector and cut VAT, on all pub and hospitality sales."

Harry Thompson