Treasury Launches Business Rates Review for Pubs and Hotels

The Treasury has launched an independent review into the way business rates are calculated for pubs and hotels, in a move the Government says could help create a fairer and more predictable system for hospitality businesses.

The review, announced today (24 August), will examine how rateable values are assessed and consider whether changes are needed to make the system more transparent and better suited to the realities of operating pubs and hotels.

Business rates expert Jerry Schurder has been appointed to lead the review, which is expected to report to the Treasury by the end of March 2027. Any resulting changes would feed into the next business rates revaluation, scheduled for 2029.

The Government has also launched a call for evidence, inviting landlords, brewers, hoteliers and other business owners to provide views and evidence on how the current valuation system affects their businesses.

Financial Secretary to the Treasury James Murray said the review would provide an opportunity to reconsider how hospitality properties are valued and develop a fairer system for the future.

The move comes as pubs, hotels and other hospitality businesses continue to face significant cost pressures, including higher employment, energy and operating costs.

Pubs are currently valued for business rates using the Fair Maintainable Trade (FMT) approach. Rather than relying principally on the size or rental value of a property, the methodology takes account of the level of trade that a reasonably efficient operator could be expected to achieve, with factors including the premises, location, trading patterns and services provided taken into consideration.

The Government’s decision to examine the system follows growing concern from the licensed trade that the current methodology can place a disproportionate burden on pubs.

UKHospitality said the review signals positive medium-term reform, but must be coupled with action at the Budget to address rising business rates bills across the whole hospitality sector.

Allen Simpson, Chief Executive of UKHospitality, said: “I’m pleased the Government is looking seriously at the valuation methodology for pubs and hotels. When you have rateable values doubling or tripling at a revaluation, that is the clearest sign yet that the system is broken and in need of proper reform.

“While this much-needed review is positive, it is medium-term reform that will not solve the immediate financial challenges caused by rising business rates bills.

“The average hotel is experiencing their rates bills rise by 110% over the next three years, with restaurants seeing rises of 54%. Combined, they employ more than 1.7 million people. They will, justifiably, be expecting to see this addressed at the Budget in October.

“While I support the Government’s independent review to improve the system to better reflect trading realities, this must be coupled with fiscal action at the Budget to reduce the entire hospitality sector’s tax burden, of which business rates represent a significant proportion.

“I look forward to working with the Government to provide evidence from across hospitality to support this review and its wider work to address the damage done to the sector over the past two years.”

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), also welcomed the review, arguing that the rates burden has put increasing pressure on pubs’ ability to remain viable.

The latest move follows the Government’s announcement in July of a 20% reduction in business rates bills for pubs, social clubs and live music venues in England from April 2027. The measure is expected to save a typical pub around £1,100 next year.

The Government has said the cost of the £100 million package will be met partly by reviewing reliefs benefiting businesses it considers to make a less positive contribution to local communities, including vape shops.

However, industry representatives have stressed that short-term relief alone will not resolve longer-term concerns about the business rates system.

The BBPA has highlighted the continuing rate of pub closures as evidence of the financial pressures facing the sector. According to its figures, 161 pubs closed across England, Scotland and Wales during the first three months of 2026, representing around 2,400 lost jobs.

Business rates are only one element of the cost pressures confronting hospitality, with employers also dealing with increases in National Insurance and the National Living Wage.