Ministers are set to reverse a planned tax increase on pubs following mounting pressure from landlords and backbench MPs, with warnings that many pubs could close when the measures take effect in April. More than 30 MPs told Chancellor Rachel Reeves that the industry faces unprecedented challenges under the Budget proposals.
The planned changes combine large increases in business rateable values with the end of the 40% relief introduced during the pandemic. According to the Pubs Advisory Service, the average pub tax bill will rise by more than £11,000 – a 37% increase from £30,375 to £41,560. The Night Time Industries Association estimates that a medium-sized restaurant could see a 50% rise, while a major city centre nightclub faces a 76% increase.
The government had already allocated £4.3 billion to help pubs transition to higher rates, but further assistance is now expected after an industry outcry. Work and Pensions Secretary Pat McFadden said the government values "the role of the pub in British life" and is "talking to the pub industry" about its concerns. Prime Minister Sir Keir Starmer acknowledged that the re-evaluation means pubs "will struggle" with business rates.
Industry leaders welcomed the U-turn but argued it does not go far enough. Kate Nicholls, chair of UKHospitality, called for a sector-wide solution, urging a maximum 20p discount to the multiplier for all hospitality properties. Sacha Lord, chair of the Night Time Industries Association, described the move as "a start, a small victory" but insisted it must apply to all hospitality, as "small family run restaurants are closing in droves".
Shadow business secretary Andrew Griffith said the Budget was "already falling apart" and accused Labour of being "forced into another screeching U-turn". Ros Morgan of the Heart of London Business Alliance criticised piecemeal responses and called for a hybrid business rate with a levy on online sales to level the playing field for high street businesses. Hotels, nightclubs, music venues and other hospitality businesses remain exposed to the rises.
