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Specialist accounts, duty and payroll for pub and bar operators.

Licensed-trade finance is a specialist discipline. Wet and dry GP splits, draught relief pricing, AWRS due diligence, Machine Games Duty, premises licence costs and tronc for bar teams all sit outside the scope of a generalist accountant. Whether you are a tenanted publican, a leaseholder or a freehold operator running one site or several, the accounts and tax need to reflect how a pub actually works.

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£19.45
Alcohol duty per litre of pure alcohol on qualifying draught beer, wine and spirits (containers 20 litres or more), versus £22.58 per litre for equivalent packaged products
6.5%
VAT Flat Rate Scheme sector rate for public houses; wet-led operators with low goods spend may be caught by the 16.5% limited-cost-trader override
£10,500
Employment Allowance per year, reducing the employer National Insurance bill for eligible pubs with front-of-house, cellar and kitchen teams

What makes pubs and bars accounting different.

Wet and dry GP split across every till

A pub's margin depends on whether you are measuring draught, packaged, food or gaming income. Wet GP% on draught products is calculated after duty and not after retail VAT. Dry GP% on food follows the same eat-in standard-rating rules as a restaurant. Stocktakes, yield analysis and waste all affect the wet margin in ways that pure accounting systems do not capture without operator-specific setup. GP% targets are illustrative guidance for management, not authoritative benchmarks.

Alcohol duty compliance and AWRS due diligence

Buying alcohol for resale from a UK wholesaler requires verifying that the wholesaler is approved under HMRC's Alcohol Wholesaler Registration Scheme before purchase, and repeating that check regularly. Records of URN verification must be kept as evidence of due diligence. Draught relief reduces the duty rate on qualifying products served from containers of at least 20 litres, making the packaged versus draught pricing decision a real margin calculation, not a guess.

Licensing costs and their tax treatment

A premises licence and a designated premises supervisor holding a personal licence are both required to sell alcohol in England and Wales (Scotland operates a different regime). The tax treatment of licensing costs splits at the first application: costs incurred on a first application for a premises licence are capital expenditure and are not deductible from trading profits (HMRC BIM61405, Kneeshaw v Albertolli). Renewal costs are deductible. This is a common error in licensed-trade accounts.

Machine Games Duty registration

Any pub or bar whose gaming machines offer cash prizes must register for Machine Games Duty before those machines go live. The duty falls on the operator holding the qualifying licence. Registration after machines are already in play exposes the operator to penalties for the period of non-compliance.

How we help pubs and bars.

Annual accounts with wet and dry margin analysis

We prepare pub accounts with cellar reconciliation, draught and packaged product margin analysis, food cost coding and gaming machine income treatment. Corporation Tax is calculated correctly for the structure of your tenancy or freehold arrangement. Licensing costs are categorised as capital or deductible based on the first-application versus renewal rule.

VAT returns, food and drink split and FRS review

We prepare quarterly VAT returns with the correct split between wet and dry sales, apply the food-VAT rules for hot and cold supplies, and review whether the Flat Rate Scheme pub-category rate of 6.5% or the standard method gives a better outcome for your business. Wet-led operators with low goods spend are checked against the 16.5% limited-cost-trader test before an FRS recommendation is made.

Tronc, payroll and employment compliance

We design tronc schemes for table-service bars and pubs under the Tips Act 2023 rules, operate payroll for variable-hours bar and kitchen teams, handle RTI submissions and carry out National Minimum Wage compliance checks each pay period. Employer National Insurance is calculated at 15% above the £5,000 secondary threshold from April 2025.

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Common questions

How do I split wet and dry sales in the pub accounts?
Wet sales (draught, packaged alcohol, soft drinks) and dry sales (food, snacks, accommodation where applicable) should be coded to separate nominal codes from the point of sale. A till or EPOS system with product-level VAT rates makes this automatic. At year-end, the split determines your wet and dry GP% and the correct VAT categorisation for each sales type. Draught products have a lower duty cost and typically a higher GP% than packaged; the accounts should reflect both separately.
Does draught relief change my drinks pricing?
Yes, materially. Draught products (served from containers of at least 20 litres) attract alcohol duty of £19.45 per litre of pure alcohol for beer, wine and spirits at 3.5% to below 8.5% ABV, versus £22.58 per litre for the equivalent packaged product. That difference feeds directly into cost price and therefore into your GP% calculation. Cask and keg pricing models should use the draught rate, not the packaged rate. Figures from gov.uk/guidance/alcohol-duty-rates.
Can I deduct the cost of my premises licence?
Only renewal costs are deductible. The cost of a first-application premises licence is capital expenditure and cannot be deducted from trading profits. This is confirmed in HMRC Business Income Manual BIM61405 (Kneeshaw v Albertolli). Renewal costs, by contrast, are a deductible trading expense. Treating first-application costs as revenue expenditure is a common error that can result in a discovery assessment.
What VAT Flat Rate Scheme rate applies to a pub?
Public houses use the 6.5% FRS sector rate. However, if the value of goods you purchase is less than 2% of your FRS turnover or less than £1,000 per year (whichever is the higher test), you are a limited-cost trader and must apply the 16.5% override rate instead. Wet-led pubs with minimal food spend are at risk of this override. See gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7300.

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Tell us about your pubs and bars business and we will reply within 24 hours.

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Other sectors we work with

RestaurantsTakeawaysHotels and GuesthousesCafes and Coffee ShopsCaterers and Street Food
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