Pubs and breweries are historic partners at the heart of villages, towns and cities across the UK. Together they are one of our most traditional industries, yet at the same time one of the most modern and exciting. Pubs are at the heart of our culture, where friends, families and neighbours come together, and where the next Ed Sheeran or Emeli Sandé is taking their first step towards superstardom. The UK’s brewers are at the forefront of a brewing revolution that has seen an explosion of beers on the market, new low and no alcohol beers, innovative flavour combinations as well as a resurgence and reinvention of traditional styles.
Most of us recognise that pubs and brewing are essential to our economy, to our social lives, and to our communities, yet over the past twenty five years taxes have increased to the point where pubs and breweries find themselves overtaxed and under genuine pressure.
Things need to change, and that is what Long Live The Local is asking for. We are asking for investment to allow pubs and breweries to grow. In return, through sector growth we will create stronger and more connected communities, local investment, jobs and a thriving industry to be proud of.
Long Live The Local is campaigning for the reform of three taxes:
Extend the freeze on beer duty and re-commit to alcohol duty reforms that support British pubs and beer as a lower strength product
Lower business rates for pubs so they are equitable to other similar businesses
Reinstatement of the lower rate of VAT for food and beverages sold in pubs with a view to making this permanent
VAT is a tax which is added to most goods in the UK and has a flat rate of 20%. Pubs, along with other licensed venues such as restaurants & bars, have to pay VAT on all food and drink they sell. This is not consistent with other food outlets such as supermarkets, convenience stores and takeaways (including cafes) where VAT is not charged on most food products, so pubs and pub goers are at a disadvantage.
To help pubs survive through the current pandemic, a temporary lower rate of VAT was introduced, initially 5% rising to 12.5%. This was an important lifeline but expired on 31st March 2022. This needs extending further with a view to making permanent.
The impact of a permanent hospitality VAT rate of 12.5% includes:
- Jobs created over 10 years — 286,850
- Additional turnover over 10 years — £7.7 billion
- Net present value of fiscal gains for HM Treasury over 10 years — £4.6 billion
- Less than 5 Years for UK Government to see positive returns on its investment
Beer Duty is a tax paid when producing and selling beer and is calculated based on the strength of the alcohol. Despite welcome freezes recently, Beer Duty has increased by 60% over the last 20 years and now the UK has one of the highest rates of duty in Europe. Beer Duty increases are written into the Budget by default, meaning Beer Duty is set to rise every year for the foreseeable future.
The alcohol duty system is also being reformed to make it simpler, fairer and more rational. Current proposals provide for a lower rate of duty for draught products to support Britain’s pubs and a more progressive scheme that better incentivises lower-strength products. These proposals are good for Britain’s economy and for public health and must now be implemented as soon as possible.
Business rates are taxes paid on non-residential properties such as shops, offices, factories, and pubs. Rates are generally calculated based on a property’s rental value, however for pubs it is a calculation based on ‘fair maintainable trade’ as determined by an independent assessor.
Business Rates changes over the years have led to what are now unsustainably high rates. The average pub today pays a business rates bill of nearly £15,000. When looking at business rates as a percentage of turnover, pubs pay 5x more than the average of other sectors.
During the pandemic business rate relief was given to hospitality and retail businesses to help them survive. This has now been scaled back significantly yet pubs are still in a fragile position in their recovery. More than ever, further rates reform is needed so that pubs only pay their fair share and remain sustainable for the long term.