Reeves’s tax increase will result in the closure of 540 pubs this year

Hundreds of Pubs Face Closure Amid Tax Hikes

Industry leaders are warning that unless immediate measures are taken, new tax policies introduced by Rachel Reeves could result in the closure of 540 pubs across the UK this year. This projection comes from UK Hospitality, which has highlighted a nearly 50% increase in the rate of pub closures if the government does not step in to reduce the heavy business rates burden currently weighing down the sector.

According to the trade group, the typical pub will see its business rates bill climb by £1,400 next year—a 15% jump. Over the next three years, this could amount to an average increase of £12,900 per pub, representing a staggering 76% rise. This surge is expected to push the number of pub closures to 540 in 2026, up from an estimated 366 in 2025, equating to around ten pubs shutting their doors every week.

These alarming statistics have surfaced shortly after Labour unveiled plans to provide relief to the pub industry, following a campaign by The Telegraph to protect British pubs from steep tax increases.

In response to the sharp tax hikes revealed in the latest Budget, hundreds of pubs—including Rachel Reeves’s own local—have barred Labour MPs from entering.

Rachel Reeves with Martin Knowles, landlord of The Marsh Inn, in Pudsey, West Yorkshire, July 2024. She has now been barred - Facebook

UK Hospitality also pointed out that pubs are not the only businesses under threat. Hotels, for example, are expected to see their business rates soar by an average of £205,200 over three years—a 115% increase.

Despite promising the lowest tax rates for pubs since 1991 during her Budget speech on November 26, Ms Reeves also announced the end of Covid-era business rates relief, which had already been reduced from 75% to 40%.

While a permanent discount on property taxes was introduced for pubs, many landlords soon discovered that their rateable values—used to calculate business rates—would rise by an average of 30%. This change has forced some village pubs to pay business rates for the first time.

The 2024 Labour Budget also brought higher employer National Insurance contributions and a rise in the minimum wage, while scaling back pandemic-related tax relief, leaving pubs particularly vulnerable.

Last week, reports emerged that ministers are considering new measures to protect pubs from these increased business rates, and a review of how commercial properties are valued for tax purposes is said to be in the works.

The announcement has sparked controversy, drawing Ms Reeves into conflict with the broader hospitality industry.

Wider Hospitality Sector Calls for Support

Restaurants, hotels, and music venues have all called for inclusion in any additional support measures. However, a spokesperson for No 10 clarified that the Chancellor’s review is currently focused solely on pubs.

Isabelle Shepherd of HaysMac, an accountancy firm, expressed concern over the limited scope of the announcement: “While pubs certainly require assistance to manage high operating costs, they are not the only ones in need of relief.”

She added that hospitality businesses of all types are facing significant cost increases due to the withdrawal of business rates relief, with some seeing their bills more than double, and most expected to absorb these costs without help.

Kate Nicholls of UK Hospitality warned that thousands of local restaurants and hotels could be forced to close permanently without further government intervention. She stated, “This is another setback for a sector already carrying the heaviest tax load in the economy, and which has been hit hard by rising National Insurance, wages, energy, and other expenses.”

She continued, “Hospitality is one of the UK’s largest employers and has enormous potential for growth and job creation, but the rising costs of doing business are outpacing revenues.”

“These challenges undermine the government’s goals of boosting economic growth and increasing employment.”

Data from global tax firm Ryan shows that, on average, one pub closed every day in 2025—a total of 366 for the year—and nearly 2,000 have shut down permanently over the past five years.

UK Hospitality estimates that next year, 574 hotels and 963 restaurants could also be forced to close due to the mounting tax burden.

The Treasury has been asked to comment on the situation.