Vape shops will pay for Burnham’s pub tax cut – here’s how
Key Points
- Pubs, social clubs and live music venues in England will receive a 20% business rates cut from April 2027, saving the typical pub an estimated £1,100
- The government will fund the £100 million a year package partly by reviewing reliefs for vape shops, which it labelled businesses that do not contribute positively to communities
- A crackdown on online marketplace sellers avoiding VAT will raise further revenue, with a consultation now open
- The largest live music venues will not qualify for the discount, with details due at the Budget
Prime Minister Andy Burnham will fund a 20% business rates cut for nearly 32,000 pubs, clubs and live music venues in England partly by stripping tax reliefs from vape shops, which the government branded businesses that “do not make a positive contribution to local communities”.
The move cuts business rates bills for pubs, social clubs and live music venues by 20% from April 2027. The government estimates the typical pub will save £1,100 in the next financial year, with the overall package worth around £100 million a year.
The Treasury said the changes will come “fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops”, singling out the category as an example of what it called “anti-social businesses” on high streets.
The government has not yet published which reliefs it will review or how much it expects to raise from vape retailers, and it has promised further detail in due course.
Online sellers in the crosshairs
The second funding stream targets online marketplace sellers who dodge their tax obligations. The government said it will crack down on businesses that sell through online marketplaces without complying with tax rules, arguing they gain an unfair advantage over businesses that play by the rules.
It has opened a consultation on making online marketplaces more responsible for stopping non-compliant sellers from avoiding VAT. The Treasury will reinvest revenue from these reforms in improvements to the business rates system.
Burnham said the package marks a change of approach after years of venue closures. “This government will back the businesses that people want to see in their communities,” he said. “What we’re announcing today is just the start as we work to bring back hope across the country.”
Chancellor John Healey said pubs, clubs and live music venues “are at the heart of communities across the UK” and that the government will “back them all the way”.
Who misses out?
The largest live music venues will not qualify for the new 20% discount. The government said it wants to target support where businesses need it most, and it will set out details of the exclusion at the Budget.
The cut stacks on top of existing support. In January, the government announced a 15% relief off pubs’ and live music venues’ 2026/27 bills, with bills frozen in real terms for a further two years. The new 20% discount applies from 2027/28 on top of that relief.
In her 2025 Budget, former Chancellor Rachel Reeves announced a permanent 5p cut in the business rates multipliers for over 750,000 retail, hospitality and leisure properties, funded by a higher multiplier on the most expensive 1% of properties.
The government also provided £4.3 billion of transitional support at the revaluation, capping bill increases at 15% for most businesses and £800 for the smallest.
The government said it will return to wider business rates reform, including Small Business Rates Relief, at the upcoming Budget.
