Hospitality business rates set to nearly double by 2028 despite government tax cut claims
Hospitality venues across England will see their business rates bill nearly double in the next three years as a result of the government’s controversial overhaul of the commercial property tax.
A fresh analysis of government figures found that most pubs, restaurants and hotels will pay over £32,000 more on property tax by 2028, despite ministers claiming to have offered their sector a tax cut.
The average hospitality property is poised to see its business rates, the commercial equivalent of council tax, jump by 15 per cent to £20,835 next year, according to the research from the sector’s industry body, UK Hospitality.
The following year, venues’ tax bills are set to rise by 48 per cent compared to today, before jumping further still in 2028 to £40,409.
In three years, the average hospitality property’s business rates bill will be nearly double what it is currently, meaning firms can expect to pay some £32,714 more in tax on each property they operate.
Alongside last month’s Budget, the government set out a major overhaul of commercial property taxation aimed at reprioritising high street businesses, which have traditionally faced higher business rates bills.
Business rates bills to rise despite cut for hospitality
The tax is based on an estimation of how much a business would pay in rent for the property – known as the rateable value – made by the Treasury’s Valuation Office Agency. Firms are then given their tax rate – or ‘multiplier’ – by the government, which tends to be about 50 per cent.
Rachel Reeves announced a 5p cut to the multiplier for hospitality and retail businesses during her Budget speech, in a move she said took tax rates to their “lowest… since 1991”.
But alongside the cut, the VoA determined venues’ rateable value had risen considerably, meaning many are facing a considerably higher tax bill despite technically paying a lower rate.
“Business rates tax hikes will hit every city, town, village and high street in the country. Unfortunately, not one area of the country is spared,” said Allen Simpson, chief executive of UK Hospitality.
“The Treasury were warned, by UK Hospitality, to expect significant increases to rateable values, due to the previous revaluation being based on valuations during Covid. We laid out, in no uncertain terms, that the maximum 20p discount to the multiplier was absolutely necessary to offset these rises in rateable values.”
The government’s decision has triggered a hostile backlash from many in the industry. Hundreds of landlords have barred Labour MPs from their pubs as part of a campaign either to secure a U-turn from ministers or a cut to VAT, which levied at a much higher rate than most equivalent economies.
The Treasury was approached for comment.