The Treasury has initiated a comprehensive review into the methodology used to calculate business rates for pubs and hotels across England and Wales. Business rates expert Jerry Schurder will lead the examination, which is scheduled to conclude with a report in March 2027. Treasury officials have invited input from landlords, hoteliers, and business owners as part of the process.
The hospitality sector has faced mounting financial pressures attributed partly to business rates calculations. According to the British Beer and Pub Association, 161 pubs closed during the first three months of this year across England, Scotland, and Wales, resulting in approximately 2,400 job losses. Industry representatives have contended that pubs face disproportionately higher rates bills compared to other business types. The sector has also faced challenges from increases in National Insurance contributions and minimum wage requirements.
A key issue under examination concerns the valuation methodology applied to pubs versus other retail establishments. Pubs are currently assessed using a measure called Fair Maintainable Trade, which bases rates calculations on revenue performance. This differs from the approach used for other retailers, whose rates are determined primarily by floor area and regional market rent assessments. Business leaders have argued this system penalizes successful establishments while providing advantages to large online retailers operating from warehouses.
The government previously announced a 20% reduction in business rates for pubs, social clubs, and live music venues in England, effective in April. This followed earlier measures and emerged amid ongoing criticism from the hospitality sector. The Chancellor is expected to provide further details regarding business eligibility for rate relief during an autumn budget announcement.
While industry groups have welcomed the review, some have called for broader reforms to the entire business rates system. The Federation of Small Businesses and British Chambers of Commerce have advocated for expanded relief thresholds and comprehensive systemic overhaul rather than incremental adjustments. Opposition figures have criticized the pace of reform and cited various tax and regulatory measures affecting hospitality businesses.
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