The UK government has initiated a review into the business rates system for pubs and hotels in England and Wales, seeking to address claims of unfairness and high bills. The review will be led by business rates expert Jerry Schurder, who is tasked with assessing the current valuation methodologies and their suitability.
The current system calculates rates for pubs and hotels based on 'Fair Maintainable Trade,' a measure linked to turnover, unlike most other businesses which are assessed based on floor area. This means that as a pub or hotel's trade increases, so does its rates bill, a practice many in the sector argue is disproportionately burdensome.
Schurder is expected to report his findings in March 2027, and the Treasury has encouraged public input during the review process. "We can build a fairer system for the future," stated Financial Secretary to the Treasury James Murray, signaling a potential overhaul of how these businesses are assessed.
This review follows a separate announcement in July, where Andy Burnham confirmed a 20 percent cut in business rates for pubs, social clubs, and live music venues in England, effective from April 2027. This measure, estimated at £100 million, is to be funded by increased enforcement on businesses like vape shops that are deemed not to contribute positively to local communities.
Data from the British Beer and Pub Association indicates that 161 pubs closed in the first quarter of 2026 across England, Scotland, and Wales, resulting in approximately 2,400 job losses. Rising business rates are cited as a significant contributing factor, alongside increased staff costs due to higher national insurance contributions and minimum wage.
Industry representatives have welcomed the review. Emma McClarkin, chief executive of the British Beer and Pub Association, described the review as "sorely needed and hugely welcome," highlighting years of disproportionately high business rates impacting the sector's viability. Craig Beaumont, executive director of the Federation of Small Businesses, urged for a broader reform to the system, including raising the rates relief threshold for smaller companies.
However, some political figures have criticized the timing. Shadow Chancellor Sir Mel Stride commented that the review is "far too late for a sector this Labour Government has already done its best to kill off." Labour has indicated further reforms, including small business rates relief, will be outlined in October's Budget.