Pubs are at the heart of many local communities and have contributed massively to British traditions and history. However, with an increase in taxes, legislative changes and high overheads, pubs are struggling to stay open. With the demise of UK public houses very much a possibility, what can be done to save yours?
According to research conducted by Campaign for Real Ale (CAMRA), an average of 29 pubs close every week. Over the past decade, the sector has faced numerous changes which have contributed to the closures. These include an increase in overheads, such as rent, increase in taxes and the recent introduction of the National Living Wage. To add further, changes in consumer habits have led to an 18% fall in alcohol consumption and competition from off licences, news agents and supermarkets have made it extremely difficult for the sector to survive. Consequently, pubs are at risk of bankruptcy and demolition.
With pub owners in fear for the survival of their business, the government has introduced a range of measures over the last few years that are aimed at reviving the sector. These include:
- More Than a Pub: The Community Pub Business Support Programme – On 10 March 2016, the government injected £3.62m to help public houses which are at risk of insolvency. The scheme assists public houses with business development, advice and support services and grant funding opportunities. More information on the programme can be found here.
- Crowd-funding – Crowd-funding and alternative finance has become increasingly popular for pubs. By enabling customers and the community to invest in the business, pub owners are able to raise finances critical to the future of their business.
- Allowances and Relief – An average of 9 out of 10 pub owners fall into the category of not claiming back capital allowances or utilising their tax relief. As a result, they rack unnecessary expenses, which could be avoided. It is also important to note that pubs that manufacturer for wholesale supply are entitled to Alcoholic Ingredients Relief.
- Utilise the Tax Freeze on Duty – At the 2016 Budget, George Osborne announced that the government will continue to be a pillar of support for the sector by freezing the duty on alcohol. With only some alcohols subjected to this, pubs should ensure that they are utilising the savings where possible.
If however the above comes too late and demolition is a probability:
- Register as an ACV – Registering pubs as an ACV (Asset of Community Value) could protect it from being demolished or from business developers making use of it for other means.
- Community Support – Having the backing of the local community can significantly help with appeals against demolitions.
- Financial Advice – Where a buy-out is a possibility or the businesses finances need to be reviewed, seeking advice can offer a range of options and scenarios to help the pub become profitable again.
If you would like further advice or to discuss your own personal case, please contact our hospitality sector specialist Adam Moody at email@example.com.