Andy Burnham’s government has announced that business rates for pubs, clubs and music venues in England will be cut by 20 per cent, with the reduction set to take effect from April 2027. According to the government, the move could save pubs an estimated £1,100 over the next financial year, but our recent analysis suggests the sector’s financial pressures run much deeper.
ONS Business Insights and Conditions Survey data shows 26.2% of accommodation and food service businesses report either a severe or moderate perceived risk of insolvency, the highest perceived insolvency risk of any major UK sector. Meanwhile, 61% of small businesses identify financial costs, including taxation, VAT, National Insurance, and business rates as one of their biggest obstacles.
While the reduction could provide welcome relief for hospitality businesses, it may do little to address the wider challenges. Richard Hunt, Director at Liquidation Centre, shares his expert insight into whether this policy could make a meaningful difference.
The impact of Burnham’s business rates cut
Our data shows that 356 Public houses & bars entered liquidation in 2025 alone, but will Andy Burnham’s business rates relief give struggling pubs enough breathing space to survive?
Whito’s 2026 UK pub data puts the industry-average net profit margin at 5-10%, with well-run pubs achieving around 10-15%. Using these figures, our analysis calculates how much additional revenue a typical pub would need to generate to make the equivalent of the Government’s £1,100 business rates saving in profit.
What is the £1,100 business rates saving actually worth?
| Net profit margin | Extra revenue needed to equal £1,100 profit |
|---|---|
| 5% | |
| 7.5% | |
| 10% | |
| 15% |
For a pub operating on a 5-10% net profit margin, the £1,100 business rate saving is equivalent to generating between £11,000 and £22,000 in additional annual sales. So while £1,100 could help, pubs would need to generate thousands more in sales to make the same amount in profit.
Lumina’s UK Pub Market Report states that the average customer spends around £24.59 per head. Based on the profit margins above, a pub would need between 447 and 895 additional customer visits a year to generate the same £1,100 in profit. That works out at roughly 9 to 17 extra customers every week.
Will the business rate cuts help save pubs?
Hospitality is already one of the sectors with the highest perceived insolvency risk (26.2% report moderate or severe risk), and fixed costs are one of the biggest pressures on small businesses.
For pubs operating on tight margins, cutting business rates could make a meaningful difference, giving them the equivalent of £11,000–£22,000 in extra sales. However, the saving alone is unlikely to transform the sector or eliminate insolvency risks. Its long-term impact is likely to depend on whether wider operating pressures, including labour, energy and supplier costs, also begin to ease.
Richard Hunt, Director at Liquidation Centre, explains where the business rates cut could make the biggest difference for pubs, and why reducing one fixed cost may improve resilience for some, but more needs to be done:
“Business rates are one of the fixed costs that businesses have to pay regardless of how well they’re trading. For pubs already operating on tight margins, an annual saving of around £1,100 won’t solve every problem, but it can improve cashflow at a time when many businesses are under pressure. Whether that translates into fewer insolvencies will depend on wider pressures such as wages, energy costs and consumer spending, but any reduction in fixed overheads gives viable businesses more room to survive.
“The business rates reduction is a positive step, but it cannot be viewed in isolation. For many pubs, the bigger challenge is the combined pressure of employment costs, energy bills, rent, supplier prices and customers having less to spend. If the Government wants this policy to translate into fewer pub closures, the next priority should be creating a more sustainable cost environment for pubs that are already under pressure. The £1,100 saving can buy businesses some time, but what really matters is whether it comes alongside other measures that help pubs keep their doors open.”
Sources:
- https://whito.co.uk/research/uk-pub-marketing-data/
- https://liquidationcentre.co.uk/knowledge-hub/statistics-on-business-failure/
- https://www.lumina-intelligence.com/blog/uk-pub-market-2025-size-growth-share-statistics/
For methodology, please contact us here.