UKHospitality: Scottish Budget goes ‘nowhere near far enough’
Trade bodies have warned the Scottish government’s Budget has failed to address the real pressures hitting hospitality businesses, leaving many operators facing business rates increases worth thousands of pounds from April.
Leon Thompson, executive director of trade association UKHospitality Scotland, said the measures announced yesterday (13 January) in the Scottish Budget “do not go far enough”, with most hospitality businesses still set to pay higher bills despite limited mitigation.
The Budget 2026/27 announcement 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 (those with a rateable value up to and including £100,000/US$134,000), capped at £110,000 (US$148,000) per year for each business.
For businesses on islands and remote areas, relief will expand to 100% over the same period.
Thomson said the Budget “has not sufficiently addressed the challenges that hospitality businesses in Scotland face, and the majority will still be paying higher business rates bills in April”.
The government also announced reductions to all three non-domestic rates poundage bands for 2026/27, which apply to hospitality businesses depending on their rateable value (RV).
Trade groups have called on the government to maintain the current 40% rates relief for licensed hospitality businesses and remove the £51,000 (US$68,855) rateable value cap.
“While the reduction in the poundage is positive, it does not offset significant increases in business revaluations and the loss of 40% relief,” Thomson warned.
UKHospitality Scotland said the latest revaluation has delivered increases to rateable values often exceeding 100%, increases which Thompson said “bear no relation to the trading environment hospitality businesses are operating in”.
“They cannot trade their way to paying higher taxes,” he added.
Job losses and business closures on the horizon
Thompson described the relief package as “a sticking plaster to cap eye-watering bills” as businesses face “staggering” increases over the next three years.
“I urge the Scottish government to go further in its support of hospitality, or we will only see job losses and business closures accelerate as a result of our sector’s ever-increasing tax burden,” Thompson said.
He welcomed the government’s commitment to pass on any additional business rates support for hospitality announced in England, but stressed that swift action would be essential if further funding becomes available.
The concerns raised by UKHospitality Scotland were echoed by the Scottish Licensed Trade Association (SLTA), which said the fate of many licensed businesses and the jobs they support lay squarely with the Scottish government ahead of the Budget.
The SLTA said a lifeline for the sector was not just hoped for but “prayed for”, warning continued closures, reduced opening hours and job losses would ultimately undermine the government’s own revenue ambitions.
While acknowledging the need to fund public services, the SLTA said commercial rates represented a clear opportunity for meaningful intervention, particularly given what it described as an archaic methodology applied to licensed hospitality for decades.
The association highlighted that, despite reductions in poundage rates, the combined impact of the new revaluation, the loss of the 40% relief for many businesses, and the replacement of that support with a limited 15% relief for 2026/27 means the Budget has “gone nowhere near far enough”.
It also pointed to the continued absence of any relief for businesses paying the higher poundage rate, many of which are larger venues employing significant numbers of staff, and renewed criticism of the long-standing disparity between rates paid in Scotland and England.
Industry frustration was further reinforced by the Scottish Hospitality Group, which said there were only limited measures it could welcome in the draft Budget following what it described as a “devastating revaluation process” for licensed hospitality businesses.
The group said mitigation for the 2026 revaluation falls well short for larger premises, which often employ the most people, and expressed disappointment that the burden continues to fall disproportionately on those operators.
However, it welcomed the Scottish government’s commitment to progress an independent review of rates methodology for licensed hospitality “at pace”, saying it looks forward to playing a major role in shaping a fairer long-term system.
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