Thank you for contacting me about support for pubs and duties on alcohol.
Pubs up and down the country play a vital role not only in the economy but in our local areas, supporting a sense of community and and pride of place. After nearly two years of difficulties as a result of the pandemic, I am glad that pubs have returned to business as usual.
The Government is committed to supporting our pubs and I welcome the fact that the Government’s long-term strategy for the hospitality sector includes an extension to pavement licences, making it easier and cheaper for pubs, restaurants and cafes to continue to make outdoor dining a reality with seating, tables and street stalls to serve food and drinks. This will be implemented through the Levelling Up and Regeneration Bill.
What's more, the Autumn Budget 2021 confirmed that duty rates on beer, cider, wine and spirits will be frozen for another year, a move which will save consumers £3 billion over the next five years. Duty rates on draught beer and cider will be cut by 5 per cent, taking 3p off a pint and further supporting pubs. Under a new temporary business rates relief, the majority of retail, hospitality and leisure properties will see at least 50 per cent off their business rates bills in 2022-23.
More broadly, I was glad to see the announcement in the Autumn Budget 2021 that, following a review, the alcohol duty regime is to undergo a major simplification. The old system was an outdated system that set rates based on historical anomalies, and a new regime will be fairer to both consumers and producers, and promote product innovation in response to evolving consumer tastes.
This radical simplification of the duty system will reduce the number of main rates from 15 to 6, and tax products in proportion to their alcohol content.
All tax categories, such as beer and wine, will be moved to a standardised set of bands, with rates for products between 1.2-3.4 per cent alcohol by volume (ABV), 3.5-8.4 per cent ABV, 8.5-22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories will pay the same rate of duty if they have the same proportion of alcohol content. Registration and payment will also be simplified, and the practice where individual products have different administrative rules will end.
The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change will address the problem of harmful high-strength products being sold too cheaply, and the new rates for low strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.
These reforms mean higher strength wines will pay more duty, while wines below 11.5 per cent alcohol by volume will become cheaper. I think it is right that consumers who choose lower ABV wines should pay less duty - this is a common-sense approach that benefits both consumers and public health. The third successive duty rates freeze announced at Budget will save consumers 14p off a 75cl bottle of wine and an estimated £2 billion over the coming years. I accept there will be some administrative changes for businesses. However, we are listening closely to industry to ensure that these are not unnecessarily burdensome. My colleagues at the Treasury are carefully considering all submissions made by the wine industry to the recently closed consultation, and I will continue to follow this issue closely.
Funding is also helping make it easier for community groups to protect and take over local assets, like pubs, which are at risk of loss without community intervention. The £150 million Community Ownership Fund allows community groups to buy assets so that they can continue to serve their local area. I am aware that rural pubs were among the local assets allocated funding in the scheme's first round, giving them a new lease of life for generations to come.
I understand there is a great deal of interest in changes to the business rates system. This was clearly an area of UK tax policy which required re-examination to ensure that it minimises the burden on businesses as far as possible.
I therefore welcome that, alongside a 2023 revaluation to accurately reflect the impact of Covid-19, the Government initiated a fundamental review into the business rates system as a whole.
As a result of the review, from 2023, a new business rates relief will support investment in property improvements so that no business will face higher business rates bills for 12 months after making qualifying improvements to a property they occupy. This will enable businesses to adapt to meet rising demand and make improvements to their premises that support net zero targets and enhance productivity.
The Government is also freezing the business rates multiplier in 2022-23, a tax cut worth £4.6 billion over the next five years. This will support all ratepayers, large and small, meaning bills are 3 per cent lower than without the freeze.
It is good news that up to 400,000 retail, hospitality and leisure properties will be eligible for a new, temporary £1.7 billion of business rates relief from April 2022. This will provide support until the next revaluation, helping the businesses that make UK high streets and town centres successful evolve and adapt to changing consumer demands. Apart from reliefs in response to COVID-19, this is the biggest single-year cut to business rates in 30 years.
Thank you again for taking the time to contact me.
Craig Whittaker MP
Business Rates Relief
Retail, hospitality and leisure relief replaced the retail discount on 1 April 2022.
You could qualify for retail, hospitality and leisure relief if your business is mainly being used as a:
- restaurant, café, bar or pub
- cinema or music venue
- hospitality or leisure business - for example, a gym, a spa or a hotel
Contact your local council to find out if you’re eligible.
If you’re eligible, you could get 50% off your business rates bills for the 2022 to 2023 tax year (1 April 2022 to 31 March 2023) - up to a total value of £110,000 per business.
You may be able to get retail, hospitality and leisure relief on top of other types of business rates relief you’re eligible for. Contact your local council to check.
If you opt out of retail, hospitality and leisure relief for the 2022 to 2023 tax year you cannot change your mind.