The government has asked a business rates expert to review how the way business rates are calculated can be made fairer for pubs and hotels.
Pubs and hotels saw significant increases in rateable value in the April 2026 revaluation, but business owners say the current system does not reflect the current realities of the market.
Unlike other businesses, pubs and hotels are valued for business rates using a turnover based method, which publicans and hoteliers claim leads to them paying disproportionately higher rates.
According to the British Beer and Pub Association (BBPA), 161 British pubs closed during the first three months of this year, equivalent to almost two a day, and UKHospitality figures show that the average hotel is experiencing rates bills rising by 110% over the next three years.
As well as business rates, hospitality firms say they are struggling to cope with other costs including increases to employers’ National Insurance and a rise in the minimum wage.
Jerry Schurder, former head of business rates at property consultancy Newmark, will investigate how the system can be reformed. He will report back to the Treasury by the end of March 2027 with his recommendations implemented at the next revaluation on 1 April 2029.
Schurder has previously called for “fundamental reform, not tinkering” of business rates. He recommended that revaluations should be conducted annually rather than every three years and the revenue collected from business rates should fluctuate directly in line with changes in property values.
A consultation is also being launched today which landlords, brewers, hoteliers and business owners are encouraged to respond to.
Emma McClarkin, chief executive of the BBPA, said: “For years pubs have paid a disproportionately higher business rates bill which has ground down their ability to keep the doors open, so this review is sorely needed and hugely welcome.”
Earlier this year, prime minister Andy Burnham announced business rates for pubs, social clubs and live music venues in England will be cut by a further 20% from April next year.
It follows a 15% reduction on pubs and live music venues’ rates bills from April this year.
That was introduced after strong criticism that changes announced in the 2025 Autumn Budget would lead to company closures due to increased costs after a Covid-era discount for retail, leisure and hospitality firms was removed and properties were revalued.
Restaurants and cafes are not covered by the latest review, but they also report challenges.
Chef Tom Kerridge, who is leading a campaign to cut VAT for hospitality to 10%, said the government is getting business taxation “very, very wrong, while Yotam Ottolengh, who runs 11 hospitality firms, said the situation is “crippling” for the sector.
Craig Beaumont from the Federation of Small Businesses said Schurder’s review will bring “crucial heavyweight business rates expertise into the Treasury”, but called on the government to address the wider business rates system, including exempting more smaller firms from having to pay rates.
Allen Simpson, chief executive of UKHospitality, also called for wider business rates reform. He said: “While this much-needed review is positive, it is medium-term reform that will not solve the immediate financial challenges caused by rising business rates bills
“The average hotel is experiencing their rates bills rise by 110% over the next three years, with restaurants seeing rises of 54%. Combined, they employ more than 1.7 million people. They will, justifiably, be expecting to see this addressed at the Budget in October.
“While I support the government’s independent review to improve the system to better reflect trading realities, this must be coupled with fiscal action at the Budget to reduce the entire hospitality sector’s tax burden, of which business rates represent a significant proportion.
“I look forward to working with the government to provide evidence from across hospitality to support this review and its wider work to address the damage done to the sector over the past two years.”
Retail stores also have to pay business rates and Tom Ironside from the British Retail Consortium said it was “vitally important that the needs of retailers are not overlooked”.
Jonny Haseldine, head of business environment policy at the British Chambers of Commerce said: “While it is welcome for the pubs and hotels we represent, this review of valuations should be wider, and cover every sector.
“The full reform of business rates, promised by the government at the last election, is urgently needed. This continued piecemeal approach to reform is the wrong approach.
“Our research consistently shows hospitality is the sector most worried about business rates, with 53% of firms citing it as a concern in Q2.
“However, firms in every sector are struggling with a complex and outdated business rates system. Businesses need a system that gives them confidence to invest, grow and create jobs in every local community.”