Hospitality business rates will almost double by 2028 despite government tax cut claims

Hospitality venues across England will see business rates bills almost double in the next three years as a result of the government’s controversial commercial property tax overhaul.

The latest analysis of government figures shows that most pubs, restaurants and hotels will pay more than £32,000 in property tax by 2028, despite ministers claiming to have offered tax cuts to their sector.

The average hospitality property is set to see its business rates, the equivalent of commercial council tax, jump by 15 per cent to £20,835 next year, according to research from the sector’s industry body, British Hospitality.

Next year, venue tax bills will increase by 48 per cent compared to now, before jumping even further in 2028 to £40,409.

Within three years, the average business rate for hospitality properties will almost double the current rate, meaning companies will pay £32,714 more in tax for each property they operate.

Alongside last month’s Budget, the government introduced a major overhaul of commercial property tax aimed at reprioritizing high street businesses, which typically face higher business rates bills.

Businesses see bills rising despite cuts to the hospitality sector

The tax is based on an estimate of how much a company would pay to rent a property – known as the assessable value – made by the Treasury Department’s Office of Assessment. Companies are then assigned a tax rate – or ‘multiplier’ – by the government, which tends to be around 50 per cent.

Rachel Reeves announced a 5p multiplier cut for hospitality and retail businesses during her Budget speech, a move she said brought tax rates to “the lowest… since 1991”.

But along with the cuts, the value of venue rates determined by the VoA has increased rapidly, meaning many venues are facing much higher tax bills despite technically paying lower rates.

“Business rates tax increases will hit every town, city, village and high street in this country. Unfortunately, no region of the country will be spared,” said Allen Simpson, chief executive of British Hospitality.

“The Treasury was warned, by UK Hospitality, to expect a significant increase in assessable value, as previous revaluations were based on valuations during Covid. We determined, unequivocally, that a maximum discount of 20p on the multiplier was absolutely necessary to offset this increase in assessable value.”

The government’s decision has sparked strong reactions from many in the industry. Hundreds of landlords have banned Labor MPs from entering their pubs as part of a campaign to get a change of direction from ministers or a cut in VAT, the rate of which is much higher than in most comparable countries.

The Treasury Department was asked for comment.