The government has come under fire for claiming that 90% of pubs in England could benefit from a £1,000 business rates discount, with critics claiming that far fewer will actually receive the relief.
Philip Hammond announced in the budget on Wednesday that pubs with a rateable value of less than £100,000 would receive a £1,000 discount on their business rates bill this year. The chancellor said that 90% of all pubs had a rateable value of less than £100,000.
This measure was part of a £435m relief package designed to dampen criticism of the controversial changes to business rates which mean that some firms will see their tax bill double from April.
However, property consultancy Gerald Eve says its research shows a maximum of 61% of pubs will benefit.
It found there are just under 40,000 properties in England described as public houses and 3,700 of these have a rateable value of more than £100,000, meaning they do not qualify for the discount. Of the remainder, about 12,000 pubs already get rates relief because they are classed as small businesses. This means that a maximum of 24,375 pubs out of 40,000 will be eligible for the discount, which is 61%.
However, not all of these 24,375 pubs will receive the discount. The budget document – the red book – that the discount is “subject to state aid limits for businesses with multiple properties”. EU rules restrict state aid to €200,000 (£174,000) per business over three years. This means that the pubs that are part of chains such as JD Wetherspoon are most likely to miss out.
Jerry Schurder, the head of business rates at Gerald Eve, said the government had been “at best disingenuous” to claim that 90% of pubs could benefit.
“With a maximum of 61% of pubs set to benefit from the new rates discount, rather than the 90% stated by the chancellor in his budget, the government has yet again been caught exaggerating the benefits that ratepayers will see,” he said.
“Facts should be presented to business as they really are, rather than misrepresented in the hope of some cheap headlines. The chancellor risks losing the trust of business, and a good place to start in regaining that good faith would be to tell it like it is.”
The discount is only eligible in England because the business rates system is devolved to Scotland, Wales and Northern Ireland. The government has estimated the cost of the measure at just £25m. Business rates will bring in almost £30bn for the Treasury this year, making it one of the government’s biggest sources of income.
Pubs that expect to receive the discount have welcomed the support but called for an overhaul of business rates.
Keith Bott, who runs Titanic Brewery with his brother Dave, operating eight pubs in Stoke-on-Trent and Staffordshire, said: “To make that extra £1,000 that we now won’t have to pay, we would have had to sell £2,000 worth of beer. Additional costs that don’t bring us any benefit make it more difficult to keep pubs viable.
“This [£1,000 discount] gives us some relief for the next 12 months. We need to keep up the pressure to get a fairer system for the future. If digital businesses pay their fair share, we can reset tax burden on those businesses that are based in properties.”
The Society of Independent Brewers said: “The £1,000 reduction in business rates for pubs with a rateable value below £100,000 is welcome support for the sector, although much more needs to be done.
“But this contrasts sharply with the 2p increase on beer tax which is a blow for the millions of people who enjoy a pint of British beer in their local pub and also for Britain’s 1,800 small brewing businesses across the country.”
