Review launched into business rates for pubs and hotels

The Treasury has launched a review into how business rates are calculated for pubs and hotels in England and Wales, potentially leading to a complete system overhaul. Jerry Schurder, a former business rates policy lead at Newmark UK, will head the valuation review and is expected to report back in March 2027. The government is seeking input from landlords, hoteliers, and business owners to inform the process.

This move follows an announcement by Andy Burnham of a 20% cut in business rates for pubs, social clubs, and live music venues in England, which is set to begin in April. While pub groups have claimed they face disproportionately high bills, other commercial entities are calling for a broader reform of the entire rates framework.

The British Beer and Pub Association (BBPA) reported that 161 pubs closed during the first three months of this year across England, Scotland, and Wales. This resulted in the loss of approximately 2,400 jobs. Rising rates are cited as a primary pressure, alongside increased staff costs from National Insurance and the minimum wage.

Emma McClarkin, chief executive of the BBPA, stated that the review is welcome because pubs have long paid higher bills that have hindered their ability to remain open. The BBPA notes that pubs are valued differently than retail outlets. Instead of using floor area, they use the Fair Maintainable Trade (FMT) metric. This means rate liabilities increase when a pub's turnover grows.

Jonathan Lawson, chief executive of Butcombe Group, told the BBC that the FMT method effectively punishes pubs for being successful. He noted that large online retailers operating from warehouses are not subject to revenue-based calculations. Their rates are based on market rent rather than site revenue. Lawson observed that a very large site might pay lower rates than a small pub paying very high levels.

The review will feed into the next general rates revaluation scheduled for 2029. While Scotland and Northern Ireland set their own valuations, Wales currently aligns with the English methodology. Therefore, the investigation will cover responses from both nations.

Craig Beaumont of the Federation of Small Businesses (FSB) welcomed Schurder's appointment but argued the government must address the wider system by increasing the relief threshold for smaller firms. Jonny Haseldine of the British Chambers of Commerce (BCC) also argued the review should be wider, criticizing the current piecemeal approach to reform. He described the existing system as complex and outdated.

Shadow Chancellor Sir Mel Stride claimed the review arrived too late, asserting that tax hikes and regulation have left hospitality businesses on the brink. Daisy Cooper, the Liberal Democrat Treasury spokesperson, agreed reform was long overdue but also called for an emergency VAT cut and a reversal of jobs tax changes.

Last year, the government planned to scale back Covid-era business rate discounts, ending them this April. This, combined with upward adjustments to rateable values, threatened with higher bills. Following industry criticism, the government cut rates by 15% earlier in 2026. The new 20% discount in England will sit on top of existing support, though it excludes the largest live music venues. Eligibility details are expected in Chancellor John Healey's autumn budget.