Over 200 establishments serving alcohol shut down within a six-month period due to increased tax rates.
UK Pubs Face Increased Closures Due to Rising Taxes and Labor Costs
The UK's pub industry is grappling with a surge in closures, with eight pubs shutting down permanently every week in the first half of 2025 [1][2][3]. The primary drivers behind this trend are escalating taxes and labor costs, including hikes in national insurance contributions, the national living wage, and cuts to business rates relief.
The rate of employer national insurance contributions (NICs) has risen from 13.8% to 15%, and the threshold at which firms begin paying NICs was lowered, resulting in a significant increase in tax bills for pubs [1][3]. Additionally, the national living wage increased by 6.7% to £12.21 an hour for workers aged 21 and over in April 2025, significantly increasing labor costs for pub owners [1][3].
Smaller pubs have been particularly affected by the reduction in business rates relief, which was cut from 60% to 25% starting in April 2025. This change has resulted in an average annual bill increase of approximately 140% for small pubs, adding to their financial strain [1][2][3].
Other cost pressures, such as packaging taxes and ongoing supply chain issues, further exacerbate the economic challenges faced by the sector [3].
The South East of England has been hit hardest by these closures, with 31 pubs closing in just six months in 2025 [1][2]. Since 2020, over 2,200 pubs have closed or been converted to other uses in England and Wales, highlighting a long-term decline accelerated by recent policy changes [1][2].
Industry groups like the British Beer and Pub Association (BBPA) and the Campaign for Real Ale (CAMRA) have called on the UK government to reform business rates and beer duty and provide greater support to sustain pubs, which they emphasize have significant cultural and community value [3][4]. Without intervention, these closures are expected to continue at a concerning pace [4].
Alex Probyn, practice leader of property tax at Ryan, warned that the squeeze on the pub trade is intensifying, and many pubs never come back once they close [3]. Emma McClarkin, the BBPA's chief executive, called for the Government to act quickly to save pubs across the country due to the acceleration in pub closures caused by the jump in taxes [3].
This article was written by Henry Saker-Clark, PA Deputy Business Editor.
References: [1] The Guardian [2] The Telegraph [3] BBC News [4] The Mirror
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