PM cuts business rates for pubs, clubs and music venues – industry reaction

New Prime Minister (PM) Andy Burnham has announced a 20 per cent cut to business rates for pubs, clubs and live music venues from April. The move is expected to save a typical pub around £1,100 next year and benefit nearly 32,000 venues.

The plans will be funded by cracking down on businesses like vape shops and tax-avoidant online sellers that do not make a positive contribution to local communities”

The announcement forms part of the Government’s wider plan to drive good growth in every postcode by reducing the burden on local businesses, boosting investment on high streets and helping communities to thrive.

New business rate cuts will benefit nearly 32,000 pubs, clubs and live music venues, saving the typical pub an estimated £1,100 in the next financial year, providing much-needed certainty for businesses looking to invest, grow and create jobs.

Today’s changes will be fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops.

The Government will also crack down on businesses that sell through online marketplaces but do not comply with their tax obligations, putting them at an unfair advantage over businesses that play by the rules.

The Government is consulting on measures to make online marketplaces more responsible for preventing non-compliant sellers from avoiding their tax obligations and further detail will be set out in due course. Revenue raised from these reforms will be reinvested in improvements to the business rates system.

Prime Minister Andy Burnham said “For too long, governments have stood by while cherished venues have disappeared from our local high streets. So today I am changing that.

“This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do. What we’re announcing today is just the start as we work to bring back hope across the country.”

Chancellor of the Exchequer John Healey said “Pubs, clubs and live music venues are at the heart of communities across the UK. They help make a place what we love. They bring people together, support local jobs and help keep high streets and town centres busy — which is why we will back them all the way. We are determined to bring hope back, give businesses the support they need and generate growth in every postcode.”

Anna Leach, Chief Economist at the Institute of Directors, said “The Chancellor is right to recognise both the vital role that businesses play in creating jobs, driving investment and delivering the growth the UK economy needs, and the pressures many firms are facing from the rising cost of doing business.

“Businesses are a force for good in society. As well as driving growth and employment, they support community wellbeing, foster local pride and help create places where people want to live, work and invest. Measures that strengthen the sustainability of businesses can therefore deliver benefits far beyond the balance sheet.

“The government has come into office with a welcome commitment to work in partnership with business, providing stability, unlocking investment and putting growth at the heart of policymaking. Businesses will welcome the Chancellor’s warm words. However, firms ultimately judge governments not by rhetoric, but by the conditions they create for investment, hiring and growth.

“While targeted support for hospitality and entertainment venues is also welcome, it should be part of a broader programme of business rates reform. The current system continues to place a disproportionate burden on many bricks and mortar businesses, and greater certainty is needed to encourage long-term investment in our high streets and town centres.

“More broadly, at a time when costs remain high and confidence remains fragile, businesses need certainty, a competitive tax environment, proportionate regulation and a clear long-term growth strategy. The challenge now is to turn positive rhetoric into consistent policy delivery. If government can provide the stability and certainty that businesses need, firms across the country will be prepared to invest, innovate, hire and help drive sustainable economic growth. But where policy decisions increase costs or create uncertainty, they risk undermining the very investment and growth that ministers want to see.

“Business wants to be a partner in delivering growth. The opportunity for government is to match its supportive language with policies that strengthen competitiveness, unlock investment and give companies the confidence to invest for the long term.”

Alice Jeffries, CBI Head of Tax Policy, said: “Cuts to business rates for pubs, clubs and live music venues will provide more much needed relief for many of those businesses facing some of the sharpest cost pressures. It’s a vital first step that should help put money back into our communities and provide a welcome boost to the country’s nighttime economy.

“However, with the rates burden rising sharply for nearly all businesses with a physical presence in the UK, the next step must be to press ahead with reform of the whole broken business rates system.

“The UK’s business tax burden is already at a 25-year high, while firms face the highest property tax burdens in the G7. That’s weighing on the UK’s growth ambitions, with investment and profitability under strain and job creation showing signs of slowing.

“The business rates system is crying out for fundamental reform, not further piecemeal changes. It’s time to move forward with proposals for a slice-based system, alongside stronger incentives for investment, to create a more competitive tax environment that supports growth, investment and job creation across the whole economy. We look forward to working with the new administration to achieve that.”

Richard Jones, ICAEW Senior Tax Technical Manager said “We’re pleased that the government wishes to provide extra support for pubs, clubs and live music venues. But it’s important to acknowledge other vital parts of our high streets, such as cafes and restaurants, are also struggling with the cost of doing business, especially due to the increase in employer’s NIC.

“The input we’ve received from our members highlights that businesses in all sectors and parts of the country have been struggling with the cost and complexity of meeting their tax obligations. To help reduce this burden on businesses, we encourage the government to be more ambitious in reforming business rates to incentivise growth, improve fairness and not penalising investment – which the current system does. For example, moving to a more agile system could prevent the three-yearly shock that businesses of all sectors face when revaluations take place.”