“Business Rate Hikes will Damage UK Pubs and Restaurants”

Public House

The changes to business rates are set to officially come into force this April. Yet, several groups have voiced their concerns on the detrimental effect this rate increase will have on pubs and restaurants in particular.

With the Spring Budget set to take place on 8 March 2017, the hospitality sector has voiced concerns on what could be a damaging change. Led by the Association of Licensed Multiple Retailers (ALMR), several bodies and businesses have written a letter to the Chancellor, Philip Hammond requesting him to give a transitional relief to businesses – particularly for restaurants and pubs as a way to manage and handle the increase in business rates set to take place in April 2017.

Both the ALMR and sector influencers have expressed that pubs will see on average a 15% increase in their business rates, with rates rising to as high as 23% for restaurants.. Consequently, the increase is predicted to add an extra £300million – £500million worth of additional costs to the hospitality sector.

Chief executive of ALMR, Kate Nicholls believes that “The proposed changes to the appeals system are unfair, imprecise and potentially unworkable in practice”. At current, an average of four pubs close a week with over 11,443 pubs closing since April 2010. With one of the biggest contributing factors being the rise of business rates, pubs could be set back further. With property prices rising tremendously in London and the surrounding area, tens of thousands of restaurants could be at risk of drowning in additional expenditure.
Yet, with saying this, the government is introducing a scheme to support rural businesses, which, if implemented, will mean nearly 3,000 pubs could get between 50% and 100% relief on business rates if they qualify. A business can qualify for the rural rate relief if:

  • It is in a rural area with a population below 3,000.
  • It has a rateable value of £8,500; OR
  • It is the only pub or petrol station with a rateable value of £12,500

What else can be done?
Mark Rigby, chief executive of CVS stated: “Such drastic rises in business rates could leave the capital’s restaurant operators squeezed and – in severe cases – at risk of closure…The worst affected restaurants will see huge increases in their bills in just a matter of weeks”.
There is a strong possibility that the government will not freeze business rates; therefore, proactive planning should be a priority for businesses set to be affected by the change. Putting in place effective precautions and measures will ensure your business will be able to manage and sustain any changes that may come into force. Our article on ‘How to Reduce Your Business Rates’ may be helpful. If you would like to discuss how the changes to the rates could affect your business, contact Adam directly at adam@raffingers.co.uk.