Pub Chain Owner Laments Business Rates Increase
Phil Thorley, owner of Thorley Taverns, a small pub chain in the south east of England, has expressed concerns that his costs will increase by £62,000 annually due to recent changes in business rates announced in the Budget.
Thorley stated that 17 of his 18 sites will face higher business rates – a tax levied on commercial properties – despite Chancellor Rachel Reeves' pledge to reduce taxes for retail, leisure, and hospitality businesses.
Reeves had promised the lowest taxes for pubs, restaurants, and small shops since 1991 by increasing the levy on higher-value properties, such as warehouses used by online giants like Amazon.
Government Claims of Support
The government maintains that its changes will save most "typical independent pubs" £4,800 per year.
A firm's rateable value, based on the estimated annual rental cost of the property, is used to calculate its business rates bill. The government said it would calculate business rates for 750,000 High Street retail and hospitality firms using a lower percentage of this rateable value; however, this lower tax rate was not as beneficial as expected.
Compounding the issue, many businesses have seen their rateable value increase while also facing the gradual elimination of a 40% Covid-era discount starting in April. Transitional relief aims to cap annual rate increases, but the net effect for many firms will still be a significant rise in their business rates bill.
For properties outside London with a rateable value between £20,000 and £100,000, the transitional relief limits the increase to 15% in 2026-27, 25% in 2027-28, and 40% in 2028-29 (plus inflation).
UK Hospitality estimates that the average pub will pay an additional £12,900 over these three years, while the average hotel will face an increase of £205,200.
Industry Reactions
Speaking on BBC Radio 4's Today program, Mr. Thorley noted that the rateable value of most of his sites had "gone north," adding another £62,000 in costs to a business already "at its knees." He further stated that the industry is already under considerable strain following the previous Budget, which increased hiring costs through higher employer national insurance contributions and minimum wage hikes.
Thorley warned that another minimum wage increase would lead to "less employment, less investment, less training in the people that we've got, and less jobs for young people" and that the changes would "be the death knell to the British pub."
In response, a Treasury spokesperson said that the government is protecting pubs, restaurants, and cafes with a £4.3 billion package of support designed to limit firms' business rates bills. "This comes on top of cutting the cost of licensing to help more offer pavement drinks and al fresco dining, keeping our cut to alcohol duty on draught pints and capping corporation tax," the spokesperson added.
However, Elaine Wrigley, owner of Atlas Bar in Manchester, criticized the Chancellor's latest Budget as "smoke and mirrors." She told the BBC that the rateable value of her bar has increased from £69,000 in 2023 to £97,000 and that, even with lower multipliers for small retail, leisure, and hospitality firms, she is still facing a 15% increase in her business rates bill.
"She may well have said it's the lowest rate and the best support, but it's from the highest base," Wrigley said, adding, "We've put our prices up four times in the last 12 months, but we're at a point now where we feel like we can't put any more on to our customers, so subsequently our margins are being reduced and being squeezed, which is not helpful."
Sacha Lord, chairman of the Night Time Industries Association (NTIA), described the business rates changes as a "stealth tax" on High Street pubs, restaurants, and bars. He stated that while operators initially welcomed the Budget, the impact of revaluations became clear within hours of the announcement. "Once this kicks in in April, we are expecting to see more closures than ever before, including during the pandemic," Lord warned.
Political Fallout
The Conservatives labeled the changes "a bombshell" and warned that many pubs, restaurants, and shops would see their bills "going up, by a lot." Shadow business secretary Andrew Griffith said the government had previously consulted on a far larger discount to business rates but had "bottled it."
"The result will be more closures, fewer jobs, and lower growth," Griffith stated, calling on Reeves to change course urgently, adding that "businesses need certainty before they face these bills in April."
The Liberal Democrats also urged the government to "throw our hospitality sector a lifeline." Treasury spokeswoman Daisy Cooper said, "Our pubs, cafes, and restaurants are already on their knees, and these choices will only force more high street businesses to shut up shop." She called for a cut in the rate of VAT for the sector.
