A review into the calculation of business rates for pubs and hotels in England and Wales has been launched, potentially leading to reforms of the current system. Business rates expert Jerry Schurder has been appointed by the Treasury to lead the review into rate valuations. The findings are expected to be reported in March 2027. The government is seeking input from landlords, hoteliers, and business owners to inform the process.
This development follows a recent announcement by Andy Burnham of a 20% cut in business rates for pubs, social clubs, and live music venues in England, set to take effect in April. Pub groups have contended that they face disproportionately high business rates bills, while other businesses have advocated for a broader reform of the entire rates system.
According to the British Beer and Pub Association (BBPA), 161 pubs closed in the first three months of the year across England, Scotland, and Wales, resulting in approximately 2,400 job losses. While rising business rates are cited as a contributing factor, increased staff costs due to National Insurance hikes and minimum wage increases have also been cited as pressures on the sector.
James Murray, financial secretary to the Treasury, stated that the review aims to "rethink valuations so that we can build a fairer system for the future." Emma McClarkin, chief executive of the BBPA, welcomed the review, noting that pubs have for years paid higher business rates, impacting their ability to remain operational.
The BBPA explains that pubs are valued differently for rates compared to retail venues. Their valuation is based on a measure called Fair Maintainable Trade, rather than solely on floor area. This means that an increase in a pub's turnover directly leads to a higher rates bill.
Schurder, formerly the business rates policy lead at advisory firm Newmark UK, will conduct a review that will inform the next rates revaluation scheduled for 2029. His appointment was met with approval from Craig Beaumont of the Federation of Small Businesses (FSB), who highlighted Schurder's "crucial heavyweight business rates expertise."
However, Beaumont also urged the government to address the broader business rates system and increase rates relief thresholds for small businesses. Tom Ironside from the British Retail Consortium echoed the welcome for the review, emphasizing the importance of not overlooking the needs of retailers. Shadow Chancellor Sir Mel Stride criticized the review as "far too late," arguing that tax increases and regulations under the current government have endangered many hospitality businesses. Liberal Democrat Treasury spokesperson Daisy Cooper called for overdue reform of business rates, alongside an emergency VAT cut and a reversal of job tax changes that have particularly affected the hospitality sector.