Business rates: 15% relief for UK pubs ‘a drop in the ocean’
The UK government has introduced business rates relief for the on-trade, with pubs to get a 15% discount from April.
This will be followed by a two-year freeze on the sector’s business rates.
The move follows the autumn Budget, when the government announced that the business rates system would be reformed. However, it was quickly revealed that many on-trade businesses would pay more in the new system, prompting a U-turn.
The government has now announced a review of the valuation method, with decisions to be implemented in the 2029 revaluation.
Grassroots live music venues will also benefit from the new measures. Hotels and restaurants are explicitly excluded, however some bars will be eligible.
The criteria require a ‘pub’ to: be open to the general public; allow free entry other than when occasional entertainment is provided; allow drinking without requiring food to be consumed; and permit drinks to be purchased at a bar.
There is no specific guidance for cocktail bars or other late-night venues.
In its announcement, the government acknowledged that pub numbers have fallen by nearly 7,000 since 2010 – equal to around a 15% reduction, making it one of the hardest hit sectors within hospitality.
It estimates the new relief will save the average pub an additional £1,650 (US$2,275) in 2026/27.
It claims around 75% of pubs will see their bills fall or stay flat, while the sector as a whole will pay 8% less in business rates in 2029 than it does currently.
Chancellor Rachel Reeves said: “If we’re going to restore the pride in our communities, we need our pubs and our high streets to thrive. We’re backing British pubs with additional support, and our new High Streets Strategy will help tackle the long-term challenges that our much-loved retail, leisure and hospitality businesses have faced.
“Thriving local businesses, bustling high streets and pride restored in our communities – that’s what this government is delivering.”
The industry responds
Michael Kill, CEO of the Night Time Industries Association, described the move as “little more than a drop in the ocean”.
He said: “The sector has been savaged by rising business rates, VAT, alcohol duty, employment costs and licensing fees, and this limited, narrowly targeted relief raises a serious question: what will this actually do for the hospitality and night-time economy as a whole? Not just for pubs and music venues, but for the vast proportion of the sector that will see no benefit whatsoever from this scheme.
“This policy position is frankly baffling. Pubs, bars, nightclubs, live music venues and cultural spaces are all part of the same fragile ecosystem, facing the same structural challenges and carrying the same disproportionate tax burdens. To support one part while ignoring the rest is not just short-sighted; it is fundamentally disconnected from how this industry actually operates.”
He called on the chancellor to address the imbalance and introduce sector-wide support.
Kate Nicholls, chair of UKHospitality, welcomed the recognition of the challenges faced by hospitality, but was hesitant to praise the move. She said: “The devil will be in the detail, but we need to see pace and urgency to deliver the reform desperately needed to reduce hospitality’s tax burden, drive demand, and protect jobs and growth.
“We will work with the government over the next six months to hold their feet to the fire to deliver this.”
She added that the funding will address an “acute” challenge facing pubs, but more needs to be done to support the whole sector.
Chris Grose, rating director at Hartnell Taylor Cook, described the relief as “a temporary solution to permanent pinch points”, adding “their removal will only result in uproar from those who previously benefited as liabilities increase significantly.”
In terms of those businesses that have been excluded, he said: “At the end of the day, someone has to pay the tax the government needs to run the services we all want to use. The question is who’s covering your tab.
“The new 15% relief followed by the two-year freeze will clearly help pubs, although no doubt other sectors will look at them with jealousy. We await details of how this is to be implemented and how it is affected by any appeal against the rateable value.”
He believes the government should reform the business rates system by evaluating the rental market for pubs. He added: “Unless we look at the system as a whole, it is quite possible that reliefs will be used to subsidise higher rents.”
Further support for hospitality
The chancellor has also pledged £10 million to the Hospitality Support Fund over three years, up from the £1.5m for one year announced last April. The additional funding is intended to help more than 1,000 pubs provide extra services for local communities, such as cafés, village stores or play areas.
The government also plans to consult on loosening planning rules in the spring, to help pubs add guest rooms and expand areas without planning applications.
The move is part of a wider strategy to support retail, leisure and hospitality businesses, with a report to be published later this year to support the UK’s high streets.
Licensed venues will also be able to open after midnight for home nation games in the men’s Fifa World Cup this summer. The government is also bringing forward a consultation to allow more relaxed rules for events such as Eurovision.
Scotland
As business rates are devolved, the new relief applies to England only. However, the devolved administrations will receive additional funding to allocate as they wish.
Trade bodies have immediately urged the devolved administrations to provide similar support for Welsh and Scottish on-trade businesses.
The recent Scottish budget included a 15% non-domestic rates relief over three years for retail, hospitality and leisure venues that qualify for the basic and intermediate property rates.
Leon Thompson, executive director of UKHospitality Scotland, urged the Scottish government to use these funds to support hospitality. He said: “Like in England, Scottish hospitality businesses are facing steep hikes to business rates. Hotels are facing average increases of £68,000 over three years. Pubs are set for an average £36,000 increase.
“This is a hospitality-wide problem that needs a hospitality-wide solution.
“The Scottish government should rapidly outline its plans to bring forward a support package for the entire sector, to support business viability, jobs and the communities that rely on these businesses.
“I stand ready to work collaboratively with the Scottish government on a package that best supports the hospitality sector.”
Meanwhile, the Scottish Hospitality Group has called on every MSP to back targeted rates relief for the nation’s licensed hospitality sector.
Spokesperson Stephen Montgomery said: “We all seek a Scotland that flourishes. Having the most competitive rates regime in the UK would encourage growth and support our high streets, urban and rural. Scotland can lead, rather than follow decline.”
Wales
The Welsh Budget was released last week and provided no targeted relief for the on-trade, however it stated it would explore providing further support based on the details of Westminster’s support.
UKHospitality Cymru’s David Chapman said: “The business rates system is broken and now it’s in danger of breaking hospitality businesses in Wales.
“Welsh hospitality faces an April cliff-edge because of huge rates hikes, totalling a colossal £122m increase over the next three years.
“It is vital that every penny Welsh government receives as a result of the new hospitality financial support announced in England – and even more, if possible – is committed to a sector-wide solution to alleviate these damaging increases.
“I would urge it to engage with us on a package of support measures to reduce business rates bills from April, which will help protect employment and local communities. It can also help begin the process of growth that the nation desperately needs.”
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