Government launches review to make business rates fairer for pubs and hotels

The government has pledged to make business rate valuations fairer for pubs and hotels in England and Wales, announcing an independent review of the system that determines how much hospitality venues pay in property taxes. The move comes as the sector continues to struggle with higher bills that took effect this year after the withdrawal of pandemic-era relief and the introduction of new revaluations.

The review will focus specifically on improving the valuation process for hospitality businesses before the next scheduled revaluation date in 2029. It follows growing pressure on ministers — including from Greater Manchester Mayor Andy Burnham — to address the financial strain facing pubs, hotels and other venues across the country.

Hospitality businesses have been particularly vocal about the impact of rising business rates, arguing that the current system fails to reflect the realities of trading in a sector still recovering from the effects of the pandemic. Many venues saw their bills increase substantially when temporary relief measures were phased out, adding to pressures from higher energy costs and changing consumer habits.

The review will examine how valuations are calculated and whether the methodology used by the Valuation Office Agency accurately reflects the value of hospitality properties. Industry representatives have long argued that pubs and hotels are treated unfairly compared with other commercial properties, with valuations often based on turnover and trading potential rather than the physical characteristics of the building.

Under the current system, business rates are calculated based on the rateable value of a property, which is assessed by the Valuation Office Agency. The rateable value is meant to represent the annual rent the property could achieve if let on the open market, but hospitality businesses have claimed that this approach penalises venues in areas where property values are high but trading conditions are difficult.

The announcement comes at a time when the hospitality sector is calling for broader reform of the business rates system, which many business groups describe as outdated and disproportionate. The review is expected to consider whether alternative approaches to valuation could provide a fairer outcome for pubs and hotels, particularly those in rural areas and smaller towns where the economic context differs significantly from major cities.

Ministers have indicated that the findings of the review will inform decisions ahead of the 2029 revaluation, giving the sector time to prepare for any changes. The government has stressed that the aim is to create a system that supports hospitality businesses while maintaining the revenue that business rates generate for local services.

The review adds to a wider debate about the future of business rates in the UK, with various industry groups and political figures calling for fundamental reform. For pubs and hotels, the outcome will be closely watched, as many operators say their survival depends on a more equitable approach to taxation.