Government promises fairer business rate valuations for pubs and hotels

The government has pledged to make business rate valuations fairer for pubs and hotels in England and Wales, announcing an independent review of the system that determines how much hospitality venues pay. The move comes as the sector continues to struggle with higher bills that took effect this year after the withdrawal of pandemic-era relief and the introduction of new revaluations.

The review, which will report before the next revaluation date in 2029, is intended to improve the way valuations are calculated for hospitality businesses. Ministers have acknowledged that the current system has placed an uneven burden on pubs and hotels, many of which saw significant increases in their rateable values when the latest revaluation was applied. The announcement follows mounting pressure on the government, including from Greater Manchester mayor Andy Burnham, to provide support for an industry that remains under financial strain.

Business rates are a tax on the rateable value of a property, which is assessed by the Valuation Office Agency. For pubs and hotels, the valuation process has long been a point of contention, with industry bodies arguing that the methodology fails to reflect the realities of trading in the sector. The review will examine whether the current approach accurately captures the value of hospitality premises, and whether changes are needed to prevent disproportionate increases in future.

The timing of the review is significant. The most recent revaluation, which took effect in April, was the first since the pandemic and produced sharp rises for many hospitality businesses. Pubs and hotels were among the hardest hit, with some facing bills that increased by tens of thousands of pounds. The end of the 75 per cent relief scheme, which had been introduced during the pandemic and extended through 2024, compounded the problem, leaving many venues paying substantially more than they had in previous years.

Industry representatives have welcomed the review but have cautioned that it must deliver tangible change rather than simply produce another report. The British Beer and Pub Association and UKHospitality have both called for a fundamental rethink of how the sector is taxed, arguing that the current system penalises physical premises at a time when high streets are already struggling. They have also pointed to the wider economic contribution of the sector, which supports hundreds of thousands of jobs across the country.

The government has said it will consult with industry bodies, property experts and local authorities as part of the review. The terms of reference are expected to be published in the coming months, with a final report due ahead of the 2029 revaluation. Ministers have indicated that any changes recommended by the review would be considered as part of the next revaluation cycle, meaning that the full impact of reforms may not be felt for several years.

For pub and hotel owners, the announcement offers a measure of reassurance that their concerns are being heard, but it also leaves them in a difficult position. With the next revaluation still more than two years away, many will have to absorb the current higher bills in the meantime. The review’s findings will determine whether the sector can expect a more stable and predictable tax environment in the future, or whether the current pressures are set to continue.