Pubs and Hotels Face Major Business Rates Reform Review

Published: 17 August 2026. The English Chronicle Desk. The English Chronicle Online

The way business rates are calculated for pubs and hotels in England and Wales is to undergo a major review, in a move that could eventually lead to significant changes in how hospitality businesses are taxed.

The Treasury has appointed business rates specialist Jerry Schurder to lead the review, which will examine how properties are valued for business rates and whether the current system remains fair for different types of businesses.

Schurder is expected to report his findings in March 2027, with the conclusions feeding into the next business rates revaluation scheduled for 2029.

The government is inviting landlords, hoteliers, pub operators and other business owners to contribute their views as part of the process. Ministers say the review is intended to consider whether the valuation system needs a fundamental rethink rather than simply making short-term adjustments to bills.

James Murray, financial secretary to the Treasury, said the review would consider “a rethink of valuations” with the aim of building a fairer system for the future.

The announcement comes as hospitality businesses continue to warn that rising operating costs and taxation are putting pressure on their finances.

Pubs argue current system is unfair

One of the central issues facing the review is the way pubs are assessed for business rates.

Unlike many retail properties, which are generally assessed using property values and factors such as floor space, pubs can be valued using a methodology known as Fair Maintainable Trade, or FMT.

Under the system, assessors estimate the level of trade that a reasonably efficient operator could achieve from a property. The calculation can therefore take the trading potential of a pub into account when determining its rateable value.

Pub operators argue that this can create an unusual situation in which a successful business may face a higher rates liability because its turnover or trading potential increases.

Jonathan Lawson, chief executive of Butcombe Group, which operates around 120 pubs across southern and south-western England, told the BBC’s Today programme that the system effectively meant pubs could be “punished for success”.

He contrasted the system with the way some large online retailers are assessed, arguing that warehouses and distribution sites are generally valued according to factors such as market rent rather than the revenue generated through the business.

This, he argued, could result in a comparatively small pub paying a much larger rates bill than a substantially larger commercial property.

The British Beer and Pub Association has similarly argued that pubs have historically carried a disproportionately high business rates burden.

Its chief executive, Emma McClarkin, welcomed the review, saying the system had contributed to financial pressure on pubs and that reform was urgently needed.

Hospitality sector under growing pressure

The review comes at a difficult time for Britain’s hospitality industry.

According to the British Beer and Pub Association, 161 pubs closed during the first three months of this year across England, Scotland and Wales. The closures were estimated to represent about 2,400 lost jobs.

Business rates are only one factor contributing to the difficulties facing the sector.

Hospitality businesses have also faced higher employment costs following increases in National Insurance and the minimum wage. Rising energy, food and supply costs have added further pressure, while operators have warned that consumers are becoming increasingly cautious about discretionary spending.

For pubs and hotels, where staffing costs represent a significant proportion of overall expenditure, even relatively modest increases in employment expenses can have a substantial effect on profitability.

Industry groups therefore argue that business rates reform needs to be considered alongside the wider tax and regulatory environment.

Government has already introduced relief

The latest review follows several attempts by the government to ease the impact of business rates on hospitality businesses.

Last month, Andy Burnham announced a 20% reduction in business rates for pubs, social clubs and live music venues in England, due to take effect in April.

The reduction is intended to build on existing support introduced earlier this year.

The government had previously announced a 15% reduction for pubs and music venues following criticism from the hospitality sector.

However, businesses have faced uncertainty because of changes to previous relief schemes.

Under the former chancellor Rachel Reeves, the government said it would scale back business rates discounts that had been introduced during the Covid pandemic. Businesses were subsequently warned that the temporary support would disappear altogether from April.

At the same time, increases in the rateable values of some pub properties created the prospect of significantly higher bills.

The combination prompted sustained lobbying from hospitality organisations, which argued that the sector was being placed under disproportionate financial pressure.

The government subsequently introduced additional support, but the latest review suggests ministers recognise that the underlying valuation methodology remains controversial.

Review will cover England and Wales

The review is expected to have implications for businesses in both England and Wales because the two countries currently use the same approach to property valuations for business rates.

Scotland and Northern Ireland have separate systems and conduct their own valuations.

Schurder’s expertise will be particularly important because his work will feed into the next major revaluation in 2029.

His previous experience includes serving as business rates policy lead at advisory firm Newmark UK.

The government hopes that a detailed examination of the existing methodology will provide enough evidence to determine whether changes are necessary before the next revaluation.

For businesses, the timing is significant. Decisions made during the review could affect how properties are valued and therefore how much operators pay in business rates for years to come.

Small businesses call for wider reform

The review has received support from organisations representing businesses beyond the hospitality industry.

Craig Beaumont of the Federation of Small Businesses welcomed Schurder’s appointment, describing his expertise as an important addition to the Treasury’s work on business rates.

However, Beaumont argued that the government should look beyond the specific valuation of pubs and hotels.

He called for a broader reform of the system, including an increase in the threshold for small business rates relief so that more smaller firms could qualify.

Retailers have also stressed that they must not be overlooked.

Tom Ironside of the British Retail Consortium welcomed the review but said the interests of retail businesses should remain central to any future changes.

The comments demonstrate the difficulty facing the government: any reform aimed at reducing the burden on hospitality could have consequences for other sectors that already consider themselves disadvantaged by the current system.

Opposition parties demand faster action

The government is also facing political pressure over the issue.

Shadow Chancellor Sir Mel Stride described the review as overdue and accused the government of contributing to the difficulties faced by hospitality businesses.

He argued that higher taxes on business premises and employment, combined with changes to employment regulation, had left some businesses close to the edge.

Liberal Democrat Treasury spokesperson Daisy Cooper also said reform was long overdue.

However, she called for additional immediate measures, including an emergency reduction in VAT and a reversal of changes to employment-related taxes.

The competing demands highlight the tension between long-term structural reform and the immediate financial pressures facing businesses.

A review that reports in March 2027 may eventually reshape the system, but hospitality operators are already dealing with higher costs.

Uncertainty over eligibility remains

There is also uncertainty surrounding the government’s latest business rates relief.

The 20% reduction announced in July is intended to provide additional support, but questions remain about which businesses will qualify.

The government has indicated that the relief will not apply to the very largest live music venues.

Some businesses have also been unclear about whether their premises will meet the definition of a pub and therefore qualify for the relief.

Further details are expected to be announced during Chancellor John Healey’s first Budget in the autumn.

For operators planning their finances, the precise eligibility criteria could make a significant difference to the value of the support they receive.

A test of the business rates system

The review led by Schurder could ultimately become one of the most significant examinations of business rates in years.

The central question is whether the existing system accurately reflects the ability of different businesses to pay and whether businesses with similar properties are being treated fairly.

For pub operators, the FMT methodology is a particular concern because it links the valuation of premises to their potential trading performance.

For retailers and other businesses, however, the challenge is ensuring that any changes do not simply shift the burden from one sector to another.

The Treasury will therefore face a difficult balancing act.

Hospitality businesses want relief from costs that they argue are undermining the viability of pubs, hotels and entertainment venues. Other businesses want assurance that reform will not leave them paying more.

With the review due to report in March 2027 and the next revaluation scheduled for 2029, businesses now have an opportunity to make their case.

The outcome could determine whether the government chooses to make targeted changes to the valuation of hospitality properties or undertake a much broader restructuring of business rates.

For an industry facing closures, rising employment costs and increasingly difficult trading conditions, the stakes are high. The review could offer a route towards a fairer system, but businesses will be watching closely to see whether its findings translate into meaningful change.
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