Rachel Reeves signals business rates relief for hospitality industry after pub tax U-turn

Speaking on Wednesday, the Chancellor said any changes to business taxation would need to be implemented carefully.

Ms Reeves said support must be delivered "in a balanced way" as ministers assess the impact of recent revaluations.

She also confirmed that details of an enhanced transition package for businesses would be set out shortly.

The Chancellor said further announcements would be made "in the days to come".

"We need to make sure that we do that in a balanced way that particularly supports our pubs and the hospitality sector."

The Treasury had previously insisted that post-Budget concessions on business rates would apply only to public houses.

Government officials have now confirmed that broader support for hospitality businesses is under active consideration.

Industry figures have warned that the scale of business rates increases facing the sector could be severe.

Analysis by tax firm Ryan shows that music arenas are facing an average rise of 142 per cent following the first business rates revaluation since the pandemic.

Four-star hotels and chain-operated three-star hotels are expected to see average increases of 97 per cent.

The increases stem from the post‑Covid revaluation of rateable values, which estimate a property’s annual rental value and form the basis for calculating business rates.

Many hospitality venues were closed or operating under severe restrictions during the pandemic, and as trading conditions recovered, their updated rateable values rose sharply.

The sector has also been hit by the removal of the 40 per cent business rates relief previously available to retail, hospitality and leisure firms.

Industry groups say the Government’s replacement discount bands fall far short of what is needed, arguing that the new system does little to offset the higher bills generated by the revaluation.

Inside Government, some officials have raised concerns about the cost of expanding rates relief, warning that a wider package could run into hundreds of millions of pounds and risk unsettling financial markets.

Allies of Ms Reeves say she was taken aback by the scale of the increases some businesses are facing from April, arguing that the prospect of rates doubling overnight was not fully anticipated.

However, other Government sources acknowledge that the risks should have been identified earlier.

Jonathan Russell, head of the Valuation Office Agency (VOA), told MPs this week that his organisation had provided regular briefings to ministers on the impact of revaluation across different sectors ahead of the Budget.

Hospitality industry figures have welcomed signs that broader support may now be under consideration.

Kate Nicholls, chief executive of Hospitality UK, said the Chancellor appeared open to helping businesses beyond pubs, noting: “It’s good to see recognition of wider hospitality and that she is talking about support beyond pubs.”

But some industry leaders have cautioned against favouring one part of the sector over another.

Russell Imrie, president of BWH Hotels GB, warned that selective relief could distort competition, arguing that hotel bars and restaurants compete directly with traditional pubs.

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