Business rates changes will cost me £62,000

The owner of a small pub chain in the south east of England has said his costs will rise by £62,000 per year after changes announced in the Budget.

Phil Thorley, who runs the Thorley Taverns pub group, said business rates – a tax on commercial properties – will rise for 17 of his 18 sites, despite Rachel Reeves promising lower taxes for retail, leisure and hospitality firms.

Reeves had vowed to introduce the lowest taxes since 1991 for pubs, restaurants and small shops by increasing the levy on higher-value properties such as warehouses used by Amazon and other online giants.

The government said changes it had made meant it was saving most “typical independent pubs” £4,800 per year.

A firm’s rateable value is based on how much it would cost to rent a firm’s property for a year, and is used to calculate a business’s rates bill.

The government said it will calculate business rates for 750,000 High Street retail and hospitality firms using a lower percentage of the rateable value of premises, but this lower tax rate was not as generous as expected.

At the same time, many firms have seen their rateable value increase and face the phasing out of a Covid-era 40% discount from April.

The net result is that, despite some transitional relief, lots of them will see significant increases in their business rates bill.

Analysis by tax advisory firm Ryan suggested the average small shop will see its business rates bill increase by 42%, restaurants will face a 45% jump and bills for pubs will be 66% higher.

Mr Thorley told BBC Radio 4’s Today programme that the rateable value at most of his sites had “gone north”.

“What it means to a small little family company like ours is that our actual payable rates is going to be going up by some 27%,” he said.

“A further £62,000 worth of costs onto the business, which is absolutely at its knees at the moment.”

He said the industry was already under significant pressure following the chancellor’s first Budget last October, which pushed up hiring costs with a hike in employer national insurance contributions and the minimum wage.

Mr Thorley said another minimum wage hike will mean “less employment, less investment, less training in the people that we’ve got, and less jobs for young people”.

And he warned the chancellor’s Budget would “be the death knell to the British pub”.

The government said it is protecting pubs, restaurants and cafes with a £4.3bn package of support, limiting firms’ business rates bills.

A Treasury spokesperson said: “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.”

But Elaine Wrigley, the owner of Atlas Bar in Manchester, said Reeves’ latest Budget was “smoke and mirrors”.

She told the BBC the rateable value of her bar, used to calculate its business rates bill, has jumped from £69,000 in 2023 to £97,000. And she said 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,” Ms Wrigley said.

She added: “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.”

And Sacha Lord, chairman of the Night Time Industries Association (NTIA) said the business rates changes amount to a “stealth tax” on High Street pubs, restaurants and bars.

He told the BBC operators initially welcomed the Budget, but the impact of revaluations became clear within hours of the chancellor’s statement.

“Once this kicks in in April, we are expecting to see more closures than ever before, including during the pandemic,” Mr Lord warned.

The Conservatives dubbed the chancellor’s business rates changes “a bombshell” and warned 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,” he said.

He called on Reeves to change course urgently, adding that “businesses need certainty before they face these bills in April”.

The Liberal Democrats said Reeves should “throw our hospitality sector a lifeline”.

Treasury spokeswoman Daisy Cooper added: “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 the chancellor to cut the rate of VAT for the sector.