Uptick in pub insolvencies following April NICs and Minimum Wage increases
According to analysis from accountancy firm Price Bailey, April saw a rise in pub insolvencies with 67 establishments going bust. This follows the early April changes to both NICs and Minimum Wage.
The closures, which are the highest monthly number since July 2024, compare to 60 insolvencies during March of this year and 47 in February, signifying a potentially worrying trajectory for public houses.
More pubs may yet follow this fate in the coming months, with 11% of pubs having both negative net assets (meaning they are technically insolvent) and a maximum credit risk score.
Businesses with a maximum credit risk struggle to access funding without personal guarantees from directors. They are therefore highly likely to be subject to winding down petitions or intention to dissolve notices within the next year.
Matt Howard, head of the insolvency and recovery team at Price Bailey, views the latest figures with concern.
He commented: “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.
“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.
“April’s sharp rise in inflation, driven in part by rising energy costs, is adding to the misery of many publicans. One in five pubs are technically insolvent, and while it is possible to keep trading and salvage the situation, being hit with sharp payroll and energy price rises will prove too much for many of them.”
Although large pub chains and small independent pubs are continuing to close at a concerning rate, new types of pubs are performing well. More successful craft breweries such as BrewDog are reaping the benefits of a craft beer boom, while theme pubs (which combine food and drinks with games) are increasing in popularity.
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