The BBPA has urged the Chancellor to reconsider plans to increase MGD, warning that thousands of pubs could be at risk of closure if forced to pay 50 percent tax on machine takings.
The British Beer and Pub Association has warned that increasing MGD would have a “devastating” impact on the sector, with machines income often making a difference between financial viability and closure.
The association reported that each machine is estimated to deliver an average of £9,000 annually for landlords, and the proposed increase in duty from 20 to 50 percent could push the tax bill for UK pubs up to £187m.
“Last year’s Budget was brutal for the sector, and pubs were hit with cost after cost,” said BBPA CEO Emma McClarkin. “While fruit machines are a small part of the turnover, for many they make a huge difference to the bottom line.”
The warning comes after insolvency firm Price Bailey reported that almost 5,000 pubs are now rated at maximum risk and “technically insolvent” as a direct result of last year’s Budget.
More than 200 UK venues ceased to operate during the second quarter of this year, and 189 in the third quarter, as the increase in NMW and Employer NICs pushed pubs to the brink.
“The April tax and wage hikes were expected to have a delayed impact, but the insolvency data shows a sharp and immediate effect,” said Price Bailey’s head of recovery Matt Howard. “Many pubs had already exhausted their financial buffers and simply couldn’t absorb the additional costs.”
Commenting on the figures, McClarkin added “for many, the local pub is a lifeline, not a luxury, and the loss of a pub can have a real and devastating impact.”
Machine play
Emma McClarkin said… “While fruit machines are a small part of the turnover, for many they make a huge difference to the bottom line…
Pub sector pulls no punches as existential fears grow as to whether they will ever pull a pint again
The high street pubs have squared up to chancellor Rachel Reeves as a bar brawl simmers between the Treasury and the pub sector.
As if business rates and inflationary costs killing off almost 500 pubs so far this year wasn’t bad enough, the existential threat for those left on the high street is now on the economic contribution from their gaming machine offering.
And a tax rise on that would have ‘devastating impact’ on pubs said the BBPA’s Emma McClarkin.
Describing it as a “wrecking ball for the local”, the pub chief explained exactly how important machines were to pubs – and how a tax rise would tip the balance on their viability.
Nearly half of the UK’s pubs have at least one gaming machine she noted – representing in average of some £9,000 income to the pub – and of course circa 90pc of winnings to the player.
And it’s not just the threat to the small pubs, the big boys too rely on this income to support their investment and growth programmes.
Among those is BBPA member Admiral Taverns who this week warned that gaming machine tax increases will undermine any attempt by ministers to reform business rates, with a tax rise from 20 to 50 per cent potentially costing landlords almost £200 million each year. Chris Jowsey, chief executive of Admiral Taverns, reinforced the argument adding: “An increase in Machine Games Duty would have a devastating impact on the pub sector.”
