A comprehensive review into how business rates are calculated for pubs and hotels in England and Wales has been launched, with potential reforms to the system on the horizon. Treasury business rates expert Jerry Schurder will lead the inquiry into rate valuations and deliver findings in March 2027, with the government actively seeking input from landlords, hoteliers and business owners throughout the process.
The announcement comes as the hospitality sector continues to face mounting financial pressures. According to the British Beer and Pub Association (BBPA), 161 pubs closed during the first three months of 2026 across England, Scotland and Wales, representing the loss of approximately 2,400 jobs. Rising business rates have been identified as a significant factor in these closures, alongside complaints about increases in National Insurance contributions and the minimum wage driving up staffing costs.
Why are pubs paying more than other businesses?
Pubs face a fundamentally different rates calculation than retail venues, which has long been a source of grievance within the sector. Rather than being assessed solely on floor area, pubs are valued using a measure called Fair Maintainable Trade (FMT). According to government guidance on how pubs are valued for business rates, this approach links rateable value to expected trade rather than just physical space. This means that when a pub's turnover increases, its rates bill rises proportionally—a dynamic that does not apply to large online retailers operating from warehouses.
Jonathan Lawson, chief executive of Butcombe Group, which operates 120 pubs across the south and south west of England, described this as effectively punishing pubs
"for success", while warehouse-based retailers benefit from rates calculated on market rent for the area with minimal consideration of revenue generated.
"You can have a very large site paying a relatively low level of business rates versus a relatively small pub... paying a very high level of business rates."
What recent support has been provided?
The government has already taken steps to ease the burden on the sector. In July, Andy Burnham announced a 20% cut in business rates for pubs, social clubs and live music venues in England, effective from April 2026. This discount builds on an earlier 15% reduction announced earlier in 2026, following sustained criticism from the hospitality industry.
These measures followed a period of significant financial strain. The previous government under Rachel Reeves had announced the removal of business rate discounts that had been in place since the Covid pandemic, with no discount scheduled from April 2026. Combined with substantial upward adjustments to the rateable values of pub premises—which took effect on 1 April 2026 using an antecedent valuation date of 1 April 2024—landlords faced the prospect of significantly higher bills.
However, the government has indicated that the 20% discount will not apply to the "very largest" live music venues, and some confusion has emerged among businesses regarding eligibility criteria. Chancellor John Healey is expected to clarify which businesses qualify for relief in his first Budget in the autumn.
What will the review examine?
James Murray, financial secretary to the Treasury, stated that the new review would examine
"a rethink of valuations - so that we can build a fairer system for the future". Schurder, a former business rates policy lead at advisory firm Newmark UK, will conduct the inquiry with findings feeding into the next rates revaluation scheduled for 2029.
The scope extends across England and Wales, as both nations currently use the same valuation methodology. Northern Ireland and Scotland set their own separate valuations. The current multiplier structure for retail, hospitality and leisure properties includes a lower rate for smaller properties and a higher rate for larger ones, a framework the review will examine.
Who supports the review?
Emma McClarkin, chief executive of the BBPA, welcomed the announcement, stating:
"For years pubs have paid a disproportionately higher business rates bill which has ground down their ability to keep the doors open, so this review is sorely needed and hugely welcome."
Craig Beaumont of the Federation of Small Businesses (FSB) praised Schurder's appointment, saying he would bring
"crucial heavyweight business rates expertise into the Treasury". However, Beaumont argued that the government must also address the wider business rates system by exempting more smaller firms through an increased rates relief threshold.
Tom Ironside from the British Retail Consortium also welcomed the review but cautioned that
"it was vitally important that the needs of retailers are not overlooked".
What are the criticisms?
Opposition figures have expressed scepticism about the timing and scope of the review. Shadow Chancellor Sir Mel Stride said the review was
"far too late for a sector this Labour government has already done its best to kill off", adding that
"Tax hikes on business premises and jobs, alongside job-destroying regulation in the Employment Rights Act, have left many hospitality businesses on the brink."
Liberal Democrat Treasury spokesperson Daisy Cooper acknowledged that reform of business rates was
"long overdue", but called for additional measures including an emergency VAT cut and a reversal of jobs tax changes
"which have hammered hospitality in particular".
Key Facts
- Jerry Schurder will lead the business rates review with findings due in March 2027
- 161 pubs closed in the first three months of 2026, resulting in approximately 2,400 job losses
- Pubs are assessed using Fair Maintainable Trade, linking rates to turnover rather than floor area alone
- A 20% business rates discount for English pubs takes effect in April 2026, building on an earlier 15% reduction
- The review will inform the next rates revaluation scheduled for 2029
