Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential impact of (a) business rates and (b) employment costs increases on the beer and pub sector.

As set out at Autumn Budget 2024, the Government intends to introduce permanently lower tax rates for retail, hospitality, and leisure (RHL) properties, with rateable values below £500,000, from 2026-27, which will benefit almost all pubs in England. We intend to fund this by introducing a higher multiplier on the most valuable properties. The multiplier rates will be confirmed at Autumn Budget 2025.

During the interim period, for 2025-26, RHL businesses will receive a 40 per cent relief on their business rates up to a cash cap of £110,000 per business, and the tax multiplier applied to small properties will be frozen. Under the previous government, RHL relief was due to end entirely in April 2025, and so by extending it, the Government has saved the average pub, with a ratable value of £16,800, over £3,300.

In recognition of the economic and social importance of pubs, and the wider “on trade”, the Government is cutting duty on qualifying draught products – approximately two-thirds of the alcoholic drinks sold in pubs. This reduces businesses’ total duty bill by up to £100 million a year and increases the duty differential between products from 9.2 per cent to 13.9 per cent.

The Government will confirm the rates for the new multipliers at Budget 2025, taking account of the outcomes of the 2026 revaluation as well as the broader economic and fiscal context.

Tax policy and legislation is not subject to the Better Regulation Framework Guidance which requires an Impact Assessment to accompany policy decisions.  Nevertheless, when the new multipliers are set at Budget 2025 – to take effect in the 2026-27 billing year – HM Treasury intends to publish analysis of the effects of the new multiplier arrangements.

Turning to employment costs, to repair the public finances and help raise the revenue required to increase funding for public services, the Government has taken the difficult decision to increase employer National Insurance.

The Government recognises the need to protect the smallest employers which is why we have more than doubled the Employment Allowance to £10,500, meaning more than half of businesses with NICs liabilities either gain or see no change next year.

A Tax Information and Impact Note that covers the employer NICs changes was published by HMRC on 13 November 2024.

The National Minimum Wage and National Living Wage rates are set on the independent and expert advice of the Low Pay Commission (LPC).

By seeking expert and independent advice from the LPC when setting the minimum wage rates, the Government is able to ensure that the right balance is struck between the needs of workers, affordability for businesses and the impact on the economy.