'Dread' as pubs face closures amid £1 billion tax bombshell

The nation’s struggling pubs face a tax bombshell that could put up business rates for a local boozer by as much as £11,000 a year from the spring.

Industry leaders say the hospitality sector faces the quadrupling of annual bills due to the end of business rates relief, which is set to be scrapped unless the government takes action.

The trade body UKHospitality says the total extra cost to pubs, restaurants and hotels would amount to £928 million a year extra, threatening closures, job losses and higher prices.

It said a local pub could see an increase of £11,000, a town centre restaurant an additional £30,000, and a seaside hotel could be left with an increase of £40,000.

The organisation is calling on 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.

“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.

“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 warned of closures, saying: “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.”

Operators of all types have warned of the detrimental impact an end to relief without another solution would have on their investment plans, business viability, and the communities they serve.

Safari Play Venues is a small family-run business that operates two soft play venues in Milton Keynes and Peterborough. Gordon Forster, its owner, said business rates already accounts for up to 10 percent of their turnover and they would be facing £95,000 in additional rates, if relief ended and there was no solution.

He said: “Business rates support has allowed us to keep trading, keep employing staff and keep paying taxes – all positively supporting the Government finances.

“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, who co-owns several pubs in and around Suffolk with husband David, said the potential quadrupling of rates bills 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 runs the Thurlestone Hotel in Devon, 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.”