Hospitality business rates reform ‘unravelling’, with urgent action needed

New analysis from UKHospitality shows that the average pub’s business rates, even with the reduced multiplier and transitional relief, will increase 15% next year – an extra £1,400.

In 2027/28, an average pub’s rates will be £4,500 higher than today, and in 2028/29 £7,000 higher. In total, over the three years, an average pub will pay an extra £12,900.

A hotel will be paying an extra £28,900 in rates next year. In 2027/28, it will be £65,000 higher than today and in 2028/29 £111,300 higher. In total, over three years, an average hotel’s rates bill will increase by £205,200.

By 2028/29, an average pub’s business rates will have increased by 76% and an average hotel’s by 115%.

In comparison, the rates bill for a distribution warehouse, the likes used by online giants, will have only increased by 16%, an office building will have only increased by 7% and a large supermarket by only 4% by 2028/29.

Kate Nicholls, Chair of UKHospitality, said: “The Government promised in its manifesto that it would level the playing field between the high street and online giants. The plan in the Budget to achieve this is quickly unravelling, and will deliver the exact opposite.

“Our analysis shows that hospitality businesses will be paying more. Pubs will see bills increase by thousands and hotels by tens of thousands.

“We repeatedly warned the Treasury ahead of the Budget that hospitality would be uniquely impacted by significant increases to rateable values, due to the pandemic impacting previous valuations. This had to be factored into the level of business rates discount it offered the sector.

“The eye-watering increases pubs, hotels and other venues are now waking up to was exactly the reason why the Treasury had to implement the maximum possible discount. The decision not to do so will lead to higher bills next year.

“The Government can solve this issue. I’m certain they did not intend to provide online giants, office blocks and out-of-town supermarkets with a better deal than local pubs, neighbourhood restaurants and coastal hotels.

“We agree with its reforms to deliver permanently lower business rates for hospitality and we appreciate the package of transitional relief, but its current proposal is not delivering lower bills. A 20p discount for hospitality would. We urge the Chancellor to revisit.”