Pub closures surge after National Insurance and minimum wage rises

By ANGHARAD CARRICK

Updated: 11:46 BST, 16 June 2025

Pubs are closing at their fastest rate since last summer after April’s tax raid, according to new figures.

The number of pubs that declared insolvency jumped to 67 in April, the highest number since last July when 75 pubs went bust, according to accountancy firm Price Bailey.

It said insolvencies are starting to tick higher after a decline at the end of 2024, due to tax changes that took effect in April.

The rate of employer National Insurance Contributions (NICs) rose from 13.8 per cent to 15 per cent, with the threshold at which it’s paid back slashed from £9,100 to £5,000.

The National Living Wage for workers aged 21 and over also increased 6.7 per cent to £12.21 an hour, while workers aged 18-20 saw their pay increase 16.3 per cent to £10 an hour.

The hospitality industry has called on the Government to reverse the NICs increase and offer a VAT cut on food and drinks sold in hospitality venues.

Last orders: Reeves’ tax raid has pushed hospitality businesses to the brink 

‘The early signs are that the tax and minimum wage hikes which took effect in April are already tipping some struggling pubs over the edge,’ said Matt Howard, head of the insolvency and recovery team at Price Bailey.

‘It was widely believed that pub businesses would initially find ways to absorb the additional payroll costs and that the full impact would only be felt much later in the year. 

‘That the impact has been so immediate shows that many pubs had already exhausted their financial buffers.’

Pubs are also facing higher energy costs because, unlike households, they are not protected by a price cap. It means that some pubs are operating at reduced capacity due to higher costs, which means they’re not able to capitalise on demand.

Howard said: ‘Pubs are increasingly restricting opening hours to the most profitable times of the week. Many are having to sacrifice long-term customer relationships on the altar of profitability as they focus on the busiest hours.’

Price Bailey found that 21 per cent of the 8,156 operating pubs have negative net assets on their balance sheets, which deems them technically insolvent.

It said these pubs are ‘vulnerable to going bust (cash flow insolvent), which occurs when businesses are unable to make payments to suppliers or lenders.’

Of these pubs, over half sit in the maximum credit risk category, which makes it difficult to access funding without personal guarantees from directors. It marks an increase of 552 from 12 months ago.

It’s not all bad news, though. Price Bailey says that while large pub chains and small independent pubs are closing, craft breweries and themed pubs, like the Boom Battle Bar chain, are increasing in popularity.

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Pub closures surge after National Insurance and minimum wage rises

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