From Tuesday 1 April 2025, pubs in the UK will face several significant cost increases due to recent Government policy changes.

Here's an overview of how the changes will affect the sector:

Employer National Insurance Contributions (ENICs)

The rate of ENICs will rise from 13.8% from 15% from 1 April 2025 and the annual salary threshold at which employers begin paying NICs will decrease from £9,100 to £5,000.

Shortly after the figures were announced in the autumn budget, trade body UKHospitality warned that the measures could result in a £3.4bn cost hike for the hospitality sector.

It was estimated that an employee on a salary of £30,000 per annum will cost £866 more to employ.

National Living Wage (NLW)

The National Living Wage for workers aged 21 and over is also set to increase from 1 April, by 6.7%. from £11.44 to £12.21 per hour.

This means that the annual wage cost for a full-time employee working 38 hours per week will rise by approximately £1,031.58.

Alongside this, the National Minimum Wage for those aged between 18-20 will increase by 16%, from £8.60 to up to £10.00 per hour. Wage rates for under 18s will also rise by 18%, from £6.40 to £7.55, with the same rate applied to apprentice wages.

Reduction in business rates relief

The current 75% business rates relief for retail, hospitality and leisure sectors will be reduced to 40%, with a cap of £110,000 per business from April.

This is expected to result in a 140% in business rates bills on average for more than 250,000 premises in England. For pubs, the average annual business rates bill is projected to rise from £3,938 to £9,451.

Combined with other cost increases, this is expected to have a substantial impact on the financial viability of pubs, potentially leading to higher prices for consumers, as well as presenting challenging operational decisions for operators.

Water bills

As part of OFWAT's £104bn plan to improve water companies' services, bills for businesses (including pubs) will rise by 42% before inflation of the next five years.

Bills will start to increase from 1 April when the new billing year for 2025/2026 begins.