Around two pubs have been either demolished or converted since the latest business rates regime came into effect in April 2017, new findings have shown.
Following the government’s first revaluation of all business properties in seven years, Britain’s pub landlords saw rateable values of their premises increase by 14.24 per cent to £1.6bn last year.
The Valuation Office Agency (VOA) calculates the rateable value of pubs by using a “fair measureable trade” principle to predict how much income a business is likely to generate, taking into account three factors:
- The type of pub or licensed premises
- The area it’s in
- The services it offers, for example food, gaming or sports screenings
A percentage is then applied, which is agreed with the British Beer and Pub Association.
Ten months into the new business rates regime, research from ratings agency Altus Group has revealed the increased tax burden coincided with a loss of 616 pubs from UK towns and cities. Premises were either sold up and demolished or converted into homes, offices or other businesses.
However, the pace at which pubs have been closing since April 2017 has eased when compared to the previous regime. In the seven years from April 2010, high streets saw a net loss of four pubs each day, with 11,608 converted into other businesses.
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Every week one business owner faces a 90-day prison sentence for unpaid business rates
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In March 2017, ahead of revaluation, chancellor Philip Hammond handed a business rates discount of £1,000 to all pub landlords with a rateable value of under £100,000 – 90 per cent of all pubs. This relief measure was extended in November’s Budget to cover bills for 2018/19.
Commenting on the challenges facing pub landlords, Alex Probyn, UK business rates president at Altus Group, said although pubs continued to close down, Hammond’s relief measures had kept many businesses afloat.
“The increase in the thresholds at which pubs pay business rates coupled with the additional £25m of rates relief has, undoubtedly, stemmed the decline,” he explained.
“The ‘fair measurable trade’ principle is an important part of calculating the rateable value of a pub, but it isn’t openly disclosed. The only tangible way to resolve concerns around a pubs rates valuation and achieve the best outcome is through formal appeal.”
The impact of revaluation has also been felt by Britain’s largest pub chains. In January, JD Whetherspoons chairman, Tim Martin, warned that business rates had contributed to the “significant costs” likely to affect profits for the remainder of 2018.
This article is part of a wider campaign called the High Streets Initiative, a new section of Business Advice championing independent and small retailers by identifying the issues that put Britain’s high streets under pressure. Visit our High Streets Initiative section to find out more.
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