Beer Duty / 07 February 2017

The Sun story – 5.3 pence more tax on every pint

You may have seen our story in The Sun at the weekend, as we briefed the paper with a new BBPA analysis on the impact of new cost increases facing pubs.

We are highlighting the figures as part of our campaign for a 1p cut in beer duty in the Budget on 8th March.

The Sun reported that the overall effect of these changes are equivalent to a ten per cent rise in beer duty, or a 5.3 pence tax rise, on every pint.

The full breakdown contains a number of elements. By 2020, the Apprenticeship Levy will add 0.1p per pint, increases in the National Living Wage 2.8p, and auto enrolling pensions, 1.3p. Pubs are also being hit by business rates revaluation, costing 0.6p per pint.
This brings the total to the 5.3p quoted in The Sun, equivalent to an 11 per cent rise in beer duty. The cost to a typical pub from these measures is £7,178, or a hefty £374 million across the industry as a whole by 2020.

These are very significant cost rises, and action is needed to support pubs. A penny cut in beer duty is one very targeted way of getting help to pubs, at relatively little cost to the Government.

As the report rightly highlights, we also need action to business rates. Across the whole economy (in England) pubs generate 0.5 per cent of turnover yet pay 2.8 per cent of the business rates bill.

The impact of the recent revaluation means that there are thousands of pubs receiving very high increases in their rates bills.

Whilst the introduction of transitional rate relief will help somewhat, pubs with a rateable value of £100,000 or more are facing an increase of 42 per cent .

In total, some 15,467 pubs will be paying more in business rates than they were previously. This includes 2,406 pubs that will be paying at least 40 per cent more over the next five years.

Pubs pay business rates based on turnover and a huge proportion of their turnover is tax. This is, in effect, a ‘tax on a tax’. Reforms are badly needed to ensure that capital investment in pubs generating greater additional turnover is not penalised by higher business rates.

Written by

Brigid Simmonds

Twitter updates

Further Reading