Restaurant blames looming tax hike for closure

The Pumproom in Chatham says the prospect of increased costs have forced them to close

The owners of a restaurant in Kent have blamed tax increases introduced in October's budget for its closure.

The Pumproom in Chatham said it had been struggling because of rising costs and reduced consumer spending power.

Increased national insurance payments announced by Chancellor Rachel Reeves have since made it impossible to cover their costs, the owners added.

The government said it was helping the hospitality industry by reducing duty on beer and making it easier for small businesses to claim tax relief.

The Pumproom was opened in 2020 as a fine dining restaurant and cocktail bar by the owners of the Copper Rivet Distillery in Chatham Maritime.

Matthew Russell of the distillery said: "The restaurant would have to increase its turnover or its prices by roughly 15% to cover the additional wage costs.

"We're from Medway, we're born and bred and brought up in Medway, and really wanted to bring something special to this part of Kent."

Matthew Russell said his restaurant would have to increase prices or turnover by 15% to afford the tax rises

From April the rate employers pay national insurance will rise from 13.8% to 15%, while the threshold for paying it on each annual salary will fall from £9,100 to £5,000.

Morgan Schondelmer from the Beer and Pub Association said the hospitality sector will be hit by other changes on top of that.

"Right now pubs are getting 75% off their business rates bill... that is going down to 40%," she said.

"That's going to be a hit of several thousand pounds to the average pub.

"At the same time we're going to see increases in wages and increasing national insurance contributions."

The hospitality industry said it is facing a number of rising costs

The government said the tax changes will generate £25bn for public services.

It said it is supporting pubs, bars and restaurants by cutting a penny off alcohol duty for every draught pint sold from February.

It also said it has doubled employment allowance, with some smaller businesses able to claim relief of up to £10,500 a year on their employer national insurance payments.