Budget 2026: A £3,000 Rates Saving, and £7,000 of Beer Down the Drain
Updated: 2 days ago
About 1 in 10 pubs in England will pay no business rates from April 2027.
The Budget on 28 October lifts around 3,500 more pubs out of rates altogether. Pubs that still pay get their relief raised from 15% to 35%, worth over £3,000 to the average pub, according to the Treasury.
It's welcome. But duty goes up on 1 February, two months before any of that arrives. VAT stays at 20%. The National Living Wage goes up in April.
And a ten-tap pub losing 1.5 pints per tap per day pours away over £7,000 of beer a year at cost. More than double the average rates saving.
This post covers what changed, what it costs you, and what to do about it before February.
Related reading:
What Changed on Business Rates
All of this applies in England only, from April 2027.
No rates up to £18,000 rateable value. Retail, hospitality and leisure premises up to £18,000 now get 100% Small Business Rates Relief, up from £12,000.
Partial relief up to £21,000. The tapered relief now runs up to £21,000, up from £15,000.
Bigger relief for pubs that still pay. Relief rises from 15% to 35%. The Treasury puts the average saving at over £3,000 per pub.
Bills capped at inflation. Increases for qualifying retail, hospitality and leisure properties are capped at CPI for the next two years.
Small Business Rates Relief is aimed at businesses with one property. If you run more than one site, you may not get the full exemption, even on a site under the threshold. Larger sites will see little or nothing from the new thresholds.
What the Budget Didn't Fix
VAT stays at 20%. The industry asked for 10% on hospitality and didn't get it. At 20%, £1 of every £6 through your till belongs to HMRC. At 10%, it would have been £1 in every £11.
Wages go up. The National Living Wage rises from £12.71 to £13.21 an hour from 1 April 2027. For 18 to 20 year olds, it rises from £10.85 to £11.27.
Alcohol duty goes up. Duty rises with RPI inflation from 1 February 2027. RPI is reported at 3.9%.
No change on employer National Insurance or energy costs.
What the Duty Rise Costs You
Duty is charged on the alcohol in the drink, so the stronger the drink, the bigger the rise. At today's rates, with a 3.9% increase:
What it means for a pub taking £6,000 a week net on wet sales:
Whether you sell mostly beer, wine or spirits, duty works out at roughly 9% to 12% of net wet sales. That's based on a pint at £5.40, a glass of wine at £7.00 and a single spirit at £4.50. A 3.9% rise on that comes to:
Around £25 a week
Around £1,300 a year
That's the duty alone. Brewers and suppliers often put their own price increases through at the same time, so expect your cost prices to rise by more.
The 3.9% is the RPI figure reported at the Budget. HMRC hasn't published the new rates yet, so the figures may move slightly. Beers from small brewers pay less duty under Small Producer Relief, so their rise will be smaller.
Pass On Only the Duty and Your GP Still Falls
Most people will put 2p on a pint and call it done. That covers the cash. It doesn't hold the GP.
To keep the same GP %, the price has to rise by the cost increase multiplied by your GP factor. At 60% GP, the factor is 3.00:
2p extra on the cost × 3.00 = about 6p on the menu price
Put 2p on and your GP slips. Put 6p on and it stands still.
The factor for any target is 120 ÷ (100 - your GP%).
The full table is in Multiply Your Cost Price by 4.29.
The Cost You Control
No help is coming on VAT, wages or duty. The profit has to come from inside the building.
Start with the beer that never reaches the till:
A ten-tap pub losing 1.5 pints per tap per day loses 15 pints a day
That's 5,475 pints a year
At £1.30 a pint cost, that's over £7,000 of beer you've paid for and had to buy again
That's more than double the average rates saving. And when duty goes up in February, every one of those pints costs you more. It's the second rise in a row: duty went up 3.66% in February 2026, and now it goes up 3.9% in February 2027.
1.5 pints per tap per day isn't an extreme figure. On a bar without active control of the draught system, it's close to normal. It comes from temperature, gas pressure, line cleaning, pour technique, FOB detectors and glassware, and none of it shows up as one big loss.
More on where it goes:
Why You Can't Just Put Your Prices Up
The Office for Budget Responsibility forecasts CPI inflation at 3.4% in 2027, with real household income per person falling slightly across 2026 and 2027. Your customers will have less to spend at the same time as your costs go up.
Prices will still have to move, and the factor tells you the price that holds your GP. But push too far and you risk selling less.
That's why the losses matter more than ever. A pint you stop pouring away needs no price rise and costs your customers nothing. The money lost in your lines, drip trays and stock is margin you can win back without asking anyone to pay more.
What to Do Before February
Get your current cost prices. Check your last invoices against what your stock system holds. If they don't match, your GP figures are wrong before you start.
Check the GP on every line. Not the average. Every product, against its current cost.
Reprice with the factor, not by adding the duty. When the new price lists land, put the new cost through the factor so the GP holds.
Check your keg usage against your till sales. If kegs are emptying faster than the sales say they should, find out why before February makes every lost pint dearer.
Watch your drip trays. What's in them at the end of the night is money you've already paid for.
It's never been more essential to know your cost prices, your GP on every line, and to have the right controls in place to identify where your stock is going. Now, not March.
I'm David Holden. I've spent 30 years working across hospitality audit and operations, helping hotels, pubs, restaurants and bars identify where profit is being lost and put practical controls in place to stop it.
