'Nice pub tax' set to be introduced by UK Government
Ella Scott
Featured Image Credit: Getty Stock Image
Rachel Reeves is set to introduce a so-called ‘nice pub tax’ in Britain, dramatically impacting rural pubs operating in sought-after areas.
Britain’s hospitality industry is in decline, with a recent survey of 20,000 companies suggesting that two-thirds plan to follow in the footsteps of BrewDog and Leon by cutting jobs in the near future.
The news came ahead of the 1 April business rate changes and increase in minimum wage thresholds, with many restaurants, hotels, pubs and clubs bearing the brunt of significant cost increases ever since.
Sadly, another blow to businesses has been announced; establishments serving up good food and better drinks in locations deemed ‘attractive’ will be forced to pay the price.
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HMCR has advised tax officials to charge higher duties on ‘character properties’ in more picturesque locations, such as by rivers, lakes, and scenic green spaces.
“Rural houses will be character properties maintained to a high standard with good levels of amenity,” guidance read, as per The Telegraph.
But countryside taverns aren't the only establishments to be chastised.
Any with ‘substantial outside trading facilities that may include children’s play areas with ample parking’ may face higher tax levies, as will those who have a ‘premium-priced menu’.
Pubs with ‘well-planned facilities to maximise food income’ are also likely to experience the tax hike.
Institutions serving breakfast, coffee in the morning or afternoon, or those dabbling in late-night trade may also be slapped with higher tax fees.
To determine who will pay what, HMRC has split establishments into three location-dependent categories.
These are: town and city pubs; ‘destination houses’ that draw trade due to their physical characteristics; and ‘urban fringe, local and rural houses’, which cover the remaining drinking wells.
Once a pub is sorted into a category by a tax official, it will be put into a bracket based on its estimated turnover.
It’s understood that these categories will ultimately determine business rates, as per the publication.
Those in the upper level, who will have to pay more duties, will have a ‘good local following and play an active role in their local communities’, the guidance said.
After the category and the level are confirmed, a multiplier, set by the Welsh Government in Wales and HM Treasury in England, will be applied alongside any relief.
All businesses can challenge their valuation if they have evidence that their rateable value has not been correctly, as per HMRC.
The move has been slammed by The Conservative Party, who have branded it a 'nice pub tax’, claiming it would lead to ‘last orders for countless beloved watering holes’.
Shadow Communities Secretary Sir James Cleverly said: "Labour's business rates raid is heaping misery onto struggling pubs across England.
"Having promised to get bills down, Rachel Reeves has instead sent them soaring.”
Meanwhile, Allen Simpson, the chief executive of UKHospitality, said: "We have long called for complete reform of the broken business rates system, which has seen hospitality pay far more than its fair share for decades.
“While an ongoing review of valuation methodology for pubs and hotels is positive, we still need the Government to deliver its commitment to lower rates bills for the entire hospitality sector.
“That is one of the critical ways to reduce hospitality’s cost burden, which is the highest in the economy.”
A government spokesperson told FOODbible: "We’re backing Britain’s pubs – cutting this year’s business rates bills by 15 percent followed by a two year freeze, extending World Cup opening hours and increasing the Hospitality Support Fund to £10m to help venues grow."
They added: "HMRC’s expert surveyors use standard industry methods which have been used to value pubs for decades.”
Former Top Gear presenter Jeremy Clarkson, who runs The Farmer’s Dog in the Cotswolds, has previously discussed the difficulties that independent hospitality businesses face.
In January, the 66-year-old said that things were ‘pretty terrible’ at the pub due to rising business rates.
He said: “At my pub, the Farmer’s Dog, things aren’t quite so bleak but they’re still pretty terrible.
“The rateable value would shoot up from £27,250 to £55,000 and when you factor in the national insurance rise, which has upped our wage bill by £42,000 a year, we’d be up a gum tree.
"Because how can you pass this on to customers when they have a £2 billion gas bill to pay and they can’t get there anyway because of the new drink driving rules.”
Clarkson, who bought his pub for £1million, has also previously touched on proposed changes to how much alcohol you can consume before hitting the road.
The Department for Transport (DfT) has put forward plans to decrease the amount of alcohol that learner and recently qualified drivers can drink before driving. This would see the limit falling from 80mg per 100ml of blood to around 20mg.
Speaking about the forthcoming drink-driving limits, transport minister Lilian Greenwood said that her office didn’t ‘want to stop people from going to the pub and having a great night out’.
“What we’re just saying is don’t take your car,” she told Times Radio.
Experts warned that the proposed limit could spell disaster for rural institutions in areas without public transport.
“The pub sector continues to face huge challenges, so any additional policy measures that further impact trade will be of real concern to licensees, especially those in rural areas,” a spokesperson for the British Beer and Pub Association said to The Telegraph.
On the changes, Clarkson claimed that drivers would lose their license after enjoying a ‘spoonful of sherry trifle’ at their favourite restaurant.
“Soon, it won’t be one pub a day that’s closing in the UK. It’ll be all of them,” he continued whilst rallying against the idea of pubs staying open until 2am.
“I’m told by restaurateurs that their gaffs are empty by nine. And you can sense it on the streets,” the Clarkson’s Farm favourite wrote in his column for The Times.
“By ten, everyone is at home and they’re deserted. So what’s the point of staying open till 2am? It’ll simply increase the already massive wage bill and the even bigger electricity bill, and bring in a grand total of no extra customers.