Pub owner complains that independent hotels and pubs are being ‘snuffed away’ by excessive business rates, while Airbnb doesn’t pay any
PUBLISHED: 08:39 26 September 2018 | UPDATED: 08:39 26 September 2018
The co-owner of a popular Suffolk pub-hotel is bemoaning that he claims he is coughing up more each year in tax, proportionally speaking, than Airbnb.
The Crown is a pub and boutique 11-bedroom hotel in the picturesque village of Stoke-by-Nayland. Its co-owner, Richard Sunderland, says that the returns he used to see from the pub-hotel industry are “not anymore,” and he sees no reason this will change in the foreseeable future. The crux of the problem, he claims, is the business rates.
According to CAMRA, 48 pubs closed in the East of England in the first six months of 2018, representing 1.1% of the total, and CAMRA is calling on the Government to abandon any upcoming increases to the tax paid by pubs in November’s Budget. Current plans will see beer duty rise by around 2p per pint, and pubs are set to lose £1,000 in business rate relief.
The Crown’s current rateable 2017 value is £178,000 and the owners pay £87,753 per year in business rates – this is a 29% increase on the rateable value of £138,000 they paid in 2010.
The American company Airbnb, on the other hand, is not required to pay business rates. But the accommodation website does pay corporation tax (less than £300,000 in the UK last year) and collected £657m of rental payments for property owners last year.
“Airbnb does not have to bear the same costs traditional hotels do,” said Mr Sunderland. “It is far removed from the cuddly, warm, sharing economy that this Government is trying to portray.”
Airbnb is becoming increasingly popular in the UK. Nights booked with Airbnb in London rose by 45% in 2017, according to figures from Colliers International.
But for Mr Sunderland, the tax that Airbnb pays is not enough, and he would like to see more of a level playing field. “The likes of enormous platform companies like Airbnb will thrive, despite contributing absolutely ‘zero’ to this country’s greater good,” he said. “The all-powerful might of the corporate giants can soak up the financial tax pressure that this government is placing upon us.
“Unfortunately, small independently owned businesses, which I firmly believe should be and have been the heartbeat and backbone of the great British economy, are being snuffed away and we will all live to regret it unless we have a dramatic rethink in our business strategy.
“It will be boring for people to hear it repeated, but the two significant factors remain that are contributing to significant holes in profits are wage costs and business rates. In the end unless we see a ‘u-turn’ in the governments thinking, all we are doing is creating huge great divides in the retail industry that will benefit no one, especially the country.”
An Airbnb spokesperson responded to the accusations by saying that treating hard-working families looking to boost their income as commercial hotels seems “patently unfair.” “It shows a fundamental misunderstanding of how local hosts share their homes on Airbnb. The typical host in the East of England earns less than £3,000 by sharing their home for around 3 nights a month, and unlike other forms of accommodation, local families keep 97 percent of the accommodation cost.”
Explainer - how are pub business rates set?
Ian Berry, a Sudbury bookshop owner who is an expert in the field of business rates, explained that the rates pubs pay are not based on size of building and property, but mainly on “fair maintainable trade” based on type of premises, area, the service it offers (such as food or gaming), the number of bedrooms, and rent, profit and turnovers. “This would, of course, be open to challenge by the owner or tenant,” he said. “They are able to receive a reduction if a new pub opens near them.”