Scottish Hospitality Set For £69m Business Rates Hit, Without Action

New analysis from UKHospitality Scotland of the draft valuation roll from the Scottish Assessors Association reveals that these significant increases will drive bills even higher and cost the sector £69m in 2026/27, unless the Scottish Government takes action at its Budget in January.

Business rates bills will increase by £69m for the sector, if existing 40% relief for Scottish hospitality properties below £51,000 rateable value is discontinued and alongside sharp increases in rateable values.

In light of these draft valuations, UKHospitality Scotland has written to the First Minister urging the Scottish Government to pause the revaluation process and work with the sector on an alternative solution, such as freezing rateable values at current levels.

The letter also highlights several case studies from its members on how businesses will be affected:

• A small, rural pub’s draft valuation of £24,700 is a 160% increase on its previous valuation of £9,474. This will take the pub out of the Small Business Bonus Scheme and will increase bills to an unaffordable point. The business has this year already had to lay off staff.
• A rural hotel in West Scotland has seen its rateable value increase 40%, on top of a 40% increase in 2023. The increase pushes the business into the higher property rate.
• One restaurant in Edinburgh’s city centre received a rateable value increase of 54% and announced its closure last week, with immediate effect.

UKHospitality is also calling for a permanently reduced business rates poundage for hospitality and leisure at a rate of 30 pence in the pound – funded by rebalancing the burden to reflect the rise of the online economy.

Leon Thompson, Executive Director of UKHospitality Scotland, said:
“Hospitality businesses across Scotland continue to be punished by the broken business rates system.

“This 23% average increase to rateable values will push up hospitality’s business rates bill by as much as £69 million. That’s simply not sustainable.

“There are businesses that have received their draft valuations and are seeing increases of 160% and higher. They’re working out what this will mean for their bills and are coming to the clear realisation that the scale of increases will be unaffordable.

“Without action, we will only see business closures accelerate, more jobs lost and Scottish communities continue to see the loss of much-loved local venues.

“The Scottish Government can solve this problem. With these valuations only being draft, the First Minister and the Cabinet Secretary for Finance can step in and make clear that they will not allow hard-pressed Scottish hospitality businesses to be hit with this level of unjust rates hike.

“I urge them to pause the revaluation process and work with UKHospitality Scotland on an alternative solution, which spares our sector being hit by eye-watering increases to rates bills.”