Fixed Sites Face Sharp Increases in Business Rates

Business rates remain a major concern across the hospitality sector, with many fixed-site premises facing steep increases following the withdrawal of sector support and recent property revaluations. In some cases, operators are reporting rises of more than 100%, renewing calls for reform.

The Treasury has signalled a potential U-turn on business rates for pubs, after warnings that hundreds of venues could be forced to close as a result of sharply higher bills. Chancellor Rachel Reeves has confirmed that additional support is on the way, saying she is “working intensely” on a package to support pubs and is determined to “get this right.”

However, Ms Reeves has indicated that any support may be temporary and has played down calls for relief to be extended to the wider hospitality sector. Speaking on BBC Breakfast, she said an announcement would be made “in the next few days and weeks”, raising concerns about continued uncertainty for already stretched operators.

The expected support package, thought to be worth around £300m, follows backlash over post-Budget increases. While any short-term relief will be welcomed, the way business rates are calculated for pubs is now under increasing scrutiny.

Unlike shops and offices, which are generally valued based on estimated market rent, pubs are assessed using a method known as “fair maintainable trade”. This approach links a pub’s rates bill to its projected trading performance, factoring in elements such as location, size, local competition and services offered.

Critics argue that this method can leave rates bills increasingly out of step with the economic reality of running a pub, particularly as operating costs rise, and consumer behaviour continues to change. Industry leaders have therefore called for a review of the system, with some advocating a shift towards a simpler, profit-based valuation model that better reflects the cost-intensive nature of the sector.

Although an increase in the current discount on rates bills is expected, trade bodies have warned that discounts alone will not address the underlying issues. With business rates representing a significant fixed cost, many operators are urging the government to use the current intervention as an opportunity to rethink how the system works.

The Treasury has suggested that the full impact of recent revaluations did not become clear until after the Budget. Nevertheless, with support yet to be formally announced, businesses are calling for clarity and longer-term certainty around business rates.

For more information on upcoming changes affecting the hospitality sector, read our latest article on legislation.