The UK Pub Industry Under Financial Strain Calls for Tax Reforms

The chief executive of Greene King, Nick Mackenzie, has called for an urgent reform of the UK’s business rates system, describing it as an unfair burden on the pub industry. Greene King, which operates 2,600 pubs, restaurants, and hotels, reported a pre-tax loss of £147 million in its 2024 financial year. The rising financial pressures on the sector are said to be accelerating the rate of closures, with more than one pub shutting down each day on average in 2025, according to the British Beer and Pub Association (BBPA).

The current system for business rates calculates tax based on the rateable value of a property. For pubs, this is tied to their “fair maintainable turnover,” which estimates annual revenue while failing to account for increasing operational costs. This approach often leaves pubs paying significant tax bills, even when operating at a loss. Pubs are particularly vulnerable under this system, as they often occupy high-value properties and operate on low profit margins, leading to disproportionately high tax contributions. Despite only accounting for 0.4% of rateable properties, the industry pays 2.1% of total business rates.

Mackenzie highlighted the importance of pubs to local economies and communities, urging the government to move towards a system where taxes reflect profits rather than turnover. He argues that this shift would allow pubs to better manage rising costs and ensure long-term sustainability for an industry with both significant economic contributions and cultural value.

A cutback in financial relief is adding to the sector’s struggles. During the pandemic, hospitality businesses, including pubs, benefited from a 75% reduction in business rates. However, in October’s budget, Chancellor Rachel Reeves reduced this relief to 40%, costing the hospitality sector an estimated £545 million, according to consultancy Altus Group. Compounding these issues are higher national insurance contributions, increased energy costs driven by the Ukraine war, and additional expenses for glass disposal.

The BBPA’s chief executive, Emma McClarkin, has urged the government to address what she described as an outdated and unfair taxation system. She emphasised that immediate action is essential to prevent lasting damage to pubs and breweries—institutions that make substantial economic and cultural contributions to the UK.

With pub closures mounting, the pressures faced by the industry reflect broader economic challenges impacting hospitality businesses nationwide. Sector leaders insist that meaningful reform could determine whether many establishments survive in the long term.