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English pubs paying millions over-the-odds in Business Rates, new figures show

12/06/15

England’s pubs are paying almost six times more in Business Rates than can be justified by their turnover, leaving hard-pressed pubs with an annual tax bill that is a staggering £500 million bigger than their fair share.


These new findings have been revealed today by the British Beer & Pub Association, in a submission to the Government on Business Rates. The BBPA, which makes a wide range of recommendations, says the system is now “in urgent need of reform”.


The finding show that pubs and bars pay 2.8 per cent of the total UK business rates bill but account for just 0.5 per cent of business turnover. The BBPA wants a major overhaul, so that the system more closely reflects modern Britain’s economy, including as on-line sales, instead of the current purely property-based system.


Pubs are also hugely disadvantaged in other ways by the current system. They have seen a big reduction in sales in recent years, and whilst rateable values are linked to turnover, the rates system does not keep up with these changes. Allowing pubs more flexibility to appeal their rateable value based on a material reduction in turnover would make the system respond to the needs of business by recognising an adverse change in their circumstances.


Brigid Simmonds, BBPA Chief Executive, comments:


Many high street businesses are being damaged by unfairness in our rating system, but it is a particular problem for pubs. We need a system that is both fairer overall, and much more responsive to the needs of businesses like pubs.


“Pubs and the wider hospitality industry are hugely important to local communities, to the high street and to our tourism industry, and are a key engine of job creation. This review is a huge opportunity to address some of these crucial issues, through wide-ranging reforms. The Government deserves credit for raising these huge issues, and we mustn’t lose this opportunity.”


Notes to editors:

The BBPA submission is available on the BBPA website here.


Calculations are based on data covering the UK non-financial business economy for 2013 from the Annual Business Survey published by the Office for National Statistics.


Total business rates paid by UK non-financial businesses £26,451m; total business rates paid by UK public houses and bars: £733m; percentage of business rates paid by public houses and bars 2.8%.


Total turnover of UK non-financial businesses: £3,674,255m; total turnover of UK public houses and bars: £17,631m; percentage of turnover accounted for by public houses and bars 0.5%.


The BBPA’s full list of recommendations are as follows:


  • Small businesses need greater support from the business rates system, with potential increases in reliefs

  • A property based tax method appears to disadvantage food and drink, retail and accommodation

  • Pubs and bars pay 2.8% of total business rates and account for just 0.5% of turnover

  • The scope of business rates should be extended to more businesses – a ‘property tax system plus’ which captures more of the activity of online retailers, distributors and other business types

  • We remain unconvinced of the need to ensure reforms generate the same amount of income but if this is a Government priority then it is even more important that the burden is shared amongst more businesses

  • There has been a huge growth in food-led pubs over the last decade

  • The attraction of pubs tends to be in the building itself and therefore they are disadvantaged by a ‘straight’ property-based tax

  • Pubs on the high-street are being adversely affected by reduced footfall. Government must ensure the high street is not damaged by excessive taxation

  • A rates system based on property can only work if reliefs and adjustments are made – and these need to last for longer to create business certainty

  • Alternative systems should be investigated, potentially based on turnover, employment or energy – although we are not convinced any of these will work fully effectively and will create winners and losers

  • The business rates system should incentivise growth and investment more effectively than at present – and this could be achieved through greater retention of rates at local level provided that local authorities that generate less revenue are not materially worse off

  • There is no support for devolution of rate setting powers to local authorities

  • Allowing pubs more flexibility to appeal their rateable value based on a material reduction in turnover would allow this sector to more closely track economic factors

  • Other mechanisms of varying the overall rate should be considered – CPI over RPI, a measure of economic growth or property values

  • Regional and sectoral changes should also be considered

  • Businesses which have a high business rate and overall tax burden as a proportion of their turnover should be able to claim a discount

  • High business rates adversely affect the UK's competitiveness as a tourism destination

  • Government must take action to improve the appeals system and improve the administration of the current system


The British Beer & Pub Association is the leading body representing Britain’s brewers and pub companies. The Association is more than a century old and was originally founded as the Brewers’ Society in 1904. Our members account for some 90 per cent of beer brewed in Britain today, and own around 20,000 of the nation’s pubs.




Tags:

Employment, General, Business rates


For further information contact:

Neil Williams
Head of Media
nwilliams@beerandpub.com
Tel: 020 7627 9156 / 07974 249 779


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