The chancellor has announced plans to give pubs and live music venues an extra 15% cut to new business rates bills from April followed by a two-year real-terms freeze.
The government claimed its support package, which will come on top of support measures announced in the Autumn Budget, will save the average pub an additional £1,650 in 2026/27.
Due to the new relief, around 75% of pubs will see their business rates bills fall or stay flat in 2026/27 with the pub sector as a whole paying 8% less in business rates in 2029 than they do currently. The government also announced it would review the methods used to value pubs for business rates.
The u-turn was announced following widespread backlash to the news that some pubs would face nearly 100% rises in their business rates bills over the next three years as a result of the 2026 revaluation.
Rachel Kelly, associate policy director at the British Property Federation, said: “We welcome any additional support for pubs, but the fact that emergency measures are needed just weeks after government introduced its new two-tier system for business rates shows the changes have not been properly considered. The withdrawal of business rates relief for high street businesses has only been partially offset by the new split system, whereby smaller retail and hospitality premises pay a lower level of tax than larger, more valuable properties.
“This change hits all parts of the economy, with shops and restaurants as well as larger offices, warehouses and manufacturing buildings all potentially facing higher bills. The changes have made a bad system worse and government must ultimately lower and fix the multiplier tax rate and move to annual revaluations to avoid these sudden swings and emergency measures in the future.”
John Webber, head of business rates at Colliers, added: “The government’s backtracking is welcome on the immediate front, particularly for the smaller independent pub, but for the bigger chains the package will be limited, as it appears the subsidies will be limited by State Aid rules. Subsidy control limit at £315,000 over three years, or £105,000 a year, means for a chain with hundreds of pubs, support will be minimal.
“In addition, unless the government is serious about reforming the current system, the solution, purely kicks the problem down the line. We have long been saying the current rateable values for pubs, upon which business rates bills are calculated are just too high. The methods of valuation for pubs are overcomplicated comprising of rent and turnover but not taking into account increased costs. And some of the tactics used by the VOA when deciding values may need scrutiny. Kicking the issue down the road to 2029 without proper reform could still leave many pubs uncertain of their longer-term future.”
Chris Grose, rating director at Hartnell Taylor Cook, said: “You have to have some sympathy for the government. Rates bills should be absolutely clear when agreeing rent on a pub, and therefore business rates should be no surprise. The problem this time around is that business rates haven’t been hiked in isolation, instead coming alongside increases in the alcohol tax, national insurance and minimum wage.
“The backlash demonstrates the core problem with a system anchored on the use of relief. Reliefs provide a temporary solution to permanent pinch points – and their removal will only result in uproar from those who previously benefitted as liabilities increase significantly. As to whether other sectors should also qualify for relief, the same arguments apply. At the end of the day, someone has to pay the tax the government needs to run the services we all want to use. The question is who’s covering your tab.”
