It has been widely reported that numbers of public houses in England and Wales are contracting at an astonishing rate, with an estimated 6 closing every day for good. The pressures on the industry vary depending on which landlord you ask – some will cite the smoking ban as being the start of the rot, others will talk about steadily increasing taxes and a habitual change in the community generally that has moved away from the casual stop off for a “quick pint” of an evening in favour of the more cost effective trip to the supermarket.

The rise of Micro Pubs, particularly in the Kent region, is a sort of reaction to this - community based establishments springing up in disused railway arches and retail units that have been standing empty mean low overhead costs and the ability to offer a discounted pint.

However, one thing landlords will generally agree on is that the revaluation of way in which Business Rates are to be calculated from 1 April 2017 is not going to do the industry any favours.

To assess Business Rates for a public house, the Valuation Office Agency look at a range of factors, such as location, offerings and the features and style of the premises in order to estimate what they call a Fair Maintainable Turnover (“FMT”). Once the FMT has been set, there is then applied a percentage rating which determines the Business Rates payable. The process is carried out (using slightly differing ratios) for sales of drinks, food and accommodation.

The process itself has not changed, what has changed is the level of rating to be applied and the fact that the banding process referred to above does not have any focus on actual trading results and this is resulting in imbalances and perceived injustices. For example, compare two pubs of similar type, one based in a higher banded area the other in a lower band, which as a result will be paying vastly differing Business Rates, but the pub in the lower banded area (which might already enjoy lower rents, staff costs and other overheads) will end up making more net profit than the one in the higher band.

The change is expected to adversely affect 17,000 houses nationwide, with concerned landlords saying that there will be increases for some pubs of up to 500% of current levels. One such landlord has estimated that he would have to sell an additional 22,000 pints a year to make up the difference – a task he described simply as “impossible”. Another compared the difference to taking on a full-time employee and paying them to stay at home.

Rather worryingly, the appeal process does not seem particularly helpful; the Valuation Office Guidance states “It may well be that the actual trading figures in the future exceed or fall short of the estimated FMT, perhaps significantly, but this will not be grounds to increase (or decrease) an assessment based upon value judgment”.

Landlords facing an increase are going to have to make some tough decisions in the months ahead and would be well advised doing so with the benefit of an independent business review, looking critically at costs and potential overhead savings and ways of increasing trade, where possible.

PCR can assist with undertaking a range of reviews geared specifically to your business and its needs (unlike the rating authority).

Please contact Danny Allen at This email address is being protected from spambots. You need JavaScript enabled to view it. or 01634 816 066 at our Kent office for an initial, no obligation and confidential discussion.

Danny Allen
Senior Manager 

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