Review launched into how pub and hotel business rates calculated
The review of how rates are calculated in England and Wales could lead to reform of the system.
A comprehensive examination has been initiated to scrutinize the methodology behind calculating business rates for pubs and hotels across England and Wales, a move that could potentially lead to a systemic overhaul.
The Treasury has announced that Jerry Schurder, an expert in business rates, will spearhead this review into rate valuations. His findings are anticipated by March 2027. The government is actively soliciting input from landlords, hoteliers, and business proprietors to inform this process.
This development follows an announcement last month by Andy Burnham, who declared a 20% reduction in business rates for pubs, social clubs, and live music venues in England, slated to take effect in April.
Pub groups have consistently argued that they bear a disproportionately heavy burden of business rates. Concurrently, other businesses have advocated for a broader reform of the entire rates system.
According to the British Beer and Pub Association (BBPA), the first three months of this year saw the closure of 161 pubs across England, Scotland, and Wales, resulting in an estimated loss of 2,400 jobs. While escalating business rates are cited as a significant challenge for the sector, there have also been complaints regarding increased staff costs due to rises in National Insurance and the minimum wage.
James Murray, Financial Secretary to the Treasury, stated that the new review aims for "a rethink of valuations – so that we can build a fairer system for the future."
Emma McClarkin, Chief Executive of the BBPA, expressed her strong support, saying: "For years pubs have paid a disproportionately higher business rates bill which has ground down their ability to keep the doors open, so this review is sorely needed and hugely welcome." The BBPA highlights that pubs are assessed for rates differently than retail establishments. Instead of solely relying on floor area, their valuation is based on a metric called Fair Maintainable Trade, meaning that an increase in a pub's turnover directly correlates with an increase in its rates bill.
Schurder, formerly the business rates policy lead at the advisory firm Newmark UK, will have his review contribute to the next rates revaluation scheduled for 2029.
His appointment was met with approval by Craig Beaumont of the Federation of Small Businesses (FSB), who believes Schurder will bring "crucial heavyweight business rates expertise into the Treasury." However, Beaumont also stressed the government's need to address the wider business rates system and to exempt more smaller firms by raising the rates relief threshold for small businesses.
Tom Ironside from the British Retail Consortium also welcomed the review but emphasized the "vitally important that the needs of retailers are not overlooked."
Shadow Chancellor Sir Mel Stride criticized the timing of the review, calling it "far too late for a sector this Labour government has already done its best to kill off." He added, "Tax hikes on business premises and jobs, alongside job-destroying regulation in the Employment Rights Act, have left many hospitality businesses on the brink."
Liberal Democrat Treasury spokesperson Daisy Cooper described business rates reform as "long overdue." She also called for an emergency VAT cut and a reversal of "jobs tax changes which have hammered hospitality in particular."
Last year, under the previous chancellor Rachel Reeves, the government had announced a scaling back of business rate discounts that had been in effect since the Covid pandemic, with no discount at all planned from April of this year. This, coupled with substantial upward adjustments to the rateable values of pub premises, presented landlords with the prospect of significantly higher bills.
Following criticism from the hospitality industry, the government implemented a 15% cut in business rates for pubs and music venues earlier in 2026. The 20% discount for England, announced in July, will be applied in addition to the existing support.
However, the government clarified that the rates discount would not extend to the "very largest" live music venues. This has led to some uncertainty among businesses regarding their eligibility for relief, particularly concerning their classification as a pub.
Further details regarding eligible businesses are expected to be unveiled during Chancellor John Healey's inaugural Budget in the autumn.