The short version
- Jerry Schurder will lead a review of business rate valuations for pubs and hotels, reporting findings by March 2027.
- The hospitality sector faces financial pressure from rising rates, wage costs, and recent closures, prompting calls for systemic reform.
- While the government has introduced temporary relief measures, political opponents argue these steps are insufficient and delayed.
The UK Treasury has initiated a formal review into the calculation of business rates for pubs and hotels in England and Wales. This move signals a potential shift in how commercial properties in the hospitality sector are valued and taxed. The government appointed Jerry Schurder, a former policy lead at advisory firm Newmark UK, to head the inquiry. His mandate is to examine current valuation methods and propose reforms that could influence the next major rates revaluation scheduled for 2029.
The review comes amid growing distress within the hospitality industry. Data from the British Beer and Pub Association indicates that 161 pubs closed in the first quarter of this year across England, Scotland, and Wales. This wave of closures has resulted in the loss of approximately 2,400 jobs. Industry leaders argue that the current taxation framework places an undue burden on pub operators compared to other retail businesses.
A central point of contention is the method used to determine tax liabilities for pubs. Unlike many retail venues, which are often taxed based on floor area, pubs are assessed using a metric known as Fair Maintainable Trade. This approach ties rate bills directly to turnover. Consequently, when a pub’s revenue increases, its tax bill rises proportionally. Critics describe this system as punitive, arguing it discourages growth and penalizes successful establishments during periods of economic recovery.
In response to mounting pressure, the government has already implemented some relief measures. Last month, Chancellor Andy Burnham announced a 20 percent cut in business rates for pubs, social clubs, and live music venues in England, effective in April. This discount is layered on top of existing support mechanisms. Earlier this year, a 15 percent reduction was introduced after the government initially planned to remove all pandemic-era discounts entirely. The previous administration had warned that rateable values would see significant upward adjustments, leading to much higher bills for landlords.
Despite these interventions, confusion remains regarding eligibility. Some businesses are uncertain whether they qualify as pubs under the new relief criteria. Additionally, the government has clarified that the discount will not apply to the largest live music venues. Specific details on which entities qualify for the relief are expected to be outlined in Chancellor John Healey’s upcoming autumn Budget. Until then, operators must navigate a period of uncertainty regarding their financial obligations.
The hospitality sector faces challenges beyond taxation. Industry representatives cite rising National Insurance contributions and increases in the minimum wage as significant drivers of higher staff costs. These factors, combined with inflationary pressures on supplies, have squeezed profit margins. The cumulative effect has left many businesses operating on thin margins, making them vulnerable to minor economic shocks or changes in consumer spending habits.
Political reactions to the review have been mixed. Shadow Chancellor Sir Mel Stride criticized the timing of the initiative, arguing that it arrives too late for a sector already struggling under what he described as job-destroying regulations and tax hikes. He pointed to recent legislative changes in employment rights as additional burdens on hospitality employers. Conversely, Liberal Democrat spokesperson Daisy Cooper welcomed the review but called for more immediate action, including an emergency cut to value-added tax and a reversal of recent jobs tax changes.
Business groups have expressed cautious optimism about the appointment of Schurder. Craig Beaumont of the Federation of Small Businesses praised his expertise but emphasized the need for broader systemic reform. He urged the government to increase the relief threshold for small businesses, arguing that current measures do not go far enough. Similarly, Tom Ironside from the British Retail Consortium supported the review while cautioning that retailers’ needs must not be overlooked in the process.
The outcome of this review could reshape the fiscal landscape for hospitality businesses in England and Wales. By addressing the valuation methodology, the government aims to create a fairer system that supports long-term viability. However, the effectiveness of these reforms will depend on how well they address the immediate financial pressures facing operators. As the industry awaits further details, the focus remains on whether policy changes can stem the tide of closures and stabilize employment in the sector.
Stakeholders including landlords, hoteliers, and business owners are being invited to submit their views to inform the process. The Treasury has indicated that these insights will be crucial in shaping recommendations. With the report due in March 2027, there is a window for dialogue before the next revaluation cycle. The coming months will likely see continued debate over the balance between fiscal responsibility and industry support.
Sources behind this briefing
Go to the original reporting
- BBC News↗Review launched into how pub and hotel business rates calculated
