In last week’s Budget, Chancellor George Osborne revealed that small business rate relief will be permanently extended to offer 100% relief to properties with a rateable value of £12,000 or less from April 2017, which is double the previous limit.
The threshold at which the small business multiplier is set for England has increased from a rateable value of £18,000 (£25,500 in London) to £51,000.
English pubs stand to save £39m a year according to the British Beer & Pub Association (BBPA), which said the changes meant more than 16,500 pubs — about 40% of English pubs — will pay no business rates at all. About 80% of pubs are expected to benefit overall and will be better off by £1,100 per year on average, BBPA analysis suggests.
Chief executive Brigid Simmonds said the measures would provide a real boost to community locals and showed the Government was willing to listen to the trade’s concerns.
Step in the right direction
Punch boss Duncan Garrood and Admiral Taverns chief executive Kevin Georgel both welcomed the changes as a step in the right direction, but stressed more assistance was needed to help level the playing field for the on-trade.
But some licensees argued the Chancellor had not delivered on long-promised ‘root and branch reform’ of the business rates system.
Enterprise licensee Michael Duffy, who runs the Three Crowns in Bushey Heath, Hertfordshire, told the Publican’s Morning Advertiser that many local pubs had recently been hit with demands for higher rates from their local authority and felt the Budget would do little to soften the blow.
“There’s nothing in this for us”, he said. “Pubs with rateable values below £12,000 will pay no business rates but, in the south, most people are way above that threshold. I can’t think of any pubs in my local area that are below that.
“With the national living wage, most of us will be paying about £3,500 more a year. Cutting corporation tax was a bit of good news, but so many of us have losses that it doesn’t make much difference.
“It hasn’t gone far enough and, from what I can see, it hasn’t put money in the pockets of customers.”
He added: “I’d like a revamp of the system. The more beer we sell and the more we support the British brewing industry, the higher business rates we have to pay. It’s an outdated system based on turnover but should be based on profit.”
Freeholder Peter Gardner, of the Horseshoe Inn in Camelford, Cornwall, said Government policy was making it more difficult for him to keep his pub afloat.
“We used to qualify for the retail relief but, since that’s been scrapped, our business rates bill has gone up by £1,000 a year. We’re a small pub in a tiny hamlet and are categorised as a rural business, which gives us 50% rate relief but if we were classified as a small business, we would be eligible for the 100% relief — it’s farcical. Business rates are a big worry; we’re subsiding the pub with our pensions.”
Osborne confirmed annual increases of business rates bills will be based on the CPI measure of inflation rather than RPI, which the Association of Licensed Multiple Retailers said would “reduce bill growth significantly”.
Elsewhere in the Budget, the Chancellor announced a cut on commercial stamp duty, a move that has been welcomed by property specialists Christie & Co.
Managing director for pubs and restaurants Neil Morgan said: “The cut on commercial stamp duty is a tremendous boost to the sector. Our clients will be saving money, with a typical vendor selling a pub saving £5,000 on a pub worth £270,000.”