Cost hikes could force more pubs to call last orders for the final time (Image: Getty)
PUBS and restaurants across the country are braced for pain this year as fears mount that soaring costs will force well-loved venues out of business.
Changes to business rate relief mean pubs will pay on average more than ￡5,500 extra with the typical restaurant taking a hit of more than ￡7,000, according to a new Conservative analysis.
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This comes on the heels of reports of pubs closing at the fastest rate since the pandemic, with it reported last week that 412 shut down in England and Wales in the past 12 months – up from 386 the previous year.
Chancellor Rachel Reeves announced in her autumn Budget that business rate relief would fall from 75 per cent to 40 per cent.
Kate Nicholls, the chief executive of UK Hospitality, warned that “2025 is currently set to be painful for hospitality”.
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She said: “As well as the business rates bill increasing, there are also the changes to employer National Insurance Contributions to grapple with, all of which combined will result in a tsunami of costs for the sector in April. Hospitality has proven time and again that it can be an engine for growth, investment in local communities, and job creation.
“That potential is still there, if the circumstances are right but the Government must do more to incentivise growth than hamper it.”
The business rate changes, the Tories warn, will force up costs by ￡925million from April on shops, restaurants, cafes, pubs, cinemas, music venues, gyms and hotels. This comes as the hike in employers’ National Insurance Contributions will cost “an average of ￡800 per employee”.
The Conservatives predict that “pubs and restaurants with part-time workers will be the hardest hit on both fronts” and that the tax-raising measures “threaten to force up the cost of a pint and undermine the economic viability of the country’s pubs”.
Kevin Hollinrake, the Shadow Secretary of State for Local Government, said: “Labour have broken their promises and are hiking taxes on everyone. Pubs are facing a double whammy of higher business rates and higher national insurance.
“This is a massive kick to pubs which are the lifeblood of local communities. Labour’s taxes will then be passed on to consumers in higher prices: this is Labour’s pub tax.”
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Jullian Jessop of the Institute of Economic Affairs warned: “The hospitality industry is already struggling with the burdens of high taxes, high food and energy costs, and more red tape. But many pubs and restaurants will now be hit particularly hard by the increases in minimum wages and in employers’ national insurance.
“The reduction in the income threshold at which employers have to pay NI will also have a disproportionate effect on businesses which rely heavily on seasonal staff.”
A Government spokesman said: “Thriving pubs are at the heart of our communities and also play a role in supporting economic growth across the UK. We’ve recently taken action by providing 40 per cent rates relief from April 2025 and introducing a permanent, new lower business rate from 2026.
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“From April 2025 more than half of all UK employers will either see a cut or no change in their National Insurance bills. We’re also going further to support our high streets, through tackling anti-social behaviour and addressing empty properties to support entrepreneurship.””
The Campaign for Real Ale is optimistic that long-term changes to business rate could be good news for pubs.
Chairman Ash Corbett-Collins said: “The Government’s commitment to introduce new, lower business rates in 2026/27 for retail, hospitality and leisure businesses could be a game-changer for pubs – but we still need to see the full details. The Treasury must make sure this new system delivers a fairer system for pubs in England, and governments in Northern Ireland, Scotland and Wales should commit to introducing fairer systems in those nations too.”