The Treasury has launched a review into how business rates are calculated for pubs and hotels in England and Wales, after pub groups said they face disproportionately high bills.
Business rates expert Jerry Schurder will lead the review into rate valuations and report back in March 2027, the Treasury said. Pub landlords, hoteliers and other business owners are being encouraged to have their say during the process.
Unlike most businesses, which are rated on floor area, pubs and hotels are assessed using a measure called Fair Maintainable Trade. This means that when a pub or hotel's turnover rises, so does its rates bill.
James Murray, financial secretary to the Treasury, said the review would look at "a rethink of valuations - so that we can build a fairer system for the future."
In July, Andy Burnham announced a 20 per cent cut in business rates for pubs, social clubs and live music venues in England. The change is due to come into force from April 2027.
How the cuts will be funded
Labour said the £100million business rates commitment would be funded by cracking down on companies such as vape shops, which it said "do not make a positive contribution to local communities."
Schurder, a former business rates policy lead at advisory group Newmark UK, said he planned to "assess how the current valuation methodologies for pubs and hotels operate in practice and whether they remain fit for purpose."
"Stakeholder evidence and engagement will be central to informing the review's recommendations," he added.
Pub closures and rising costs
According to the British Beer and Pub Association, 161 pubs shut in the first three months of 2026 across England, Scotland and Wales, equating to the loss of approximately 2,400 jobs.
Rising business rates are cited as one issue facing the sector, but there have also been concerns that increases in employer national insurance contributions and the minimum wage have pushed up staff costs.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: "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."
Calls for wider reform
Craig Beaumont, executive director of the Federation of Small Businesses, said the Government needed to address the wider business rates system and exempt more smaller firms by raising the rates relief threshold for small companies.
Tom Ironside, director of business and regulation, welcomed the review but said it was "vitally important that the needs of retailers are not overlooked."
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."
Labour has said it will look to set out further reform, including small business rates relief, in October's Budget.
Ros Morgan, chair of the Real Rates Reform Alliance, a coalition of business organisations calling for fundamental reform of the rates system, said it was welcome that the Government had again recognised the business rates system was unsustainable, but disappointing that the review was narrowly focused on pubs and hotels when full-scale reform of the system was needed.
"We cannot keep tinkering with business rates one sector at a time; any lasting solution for pubs and hotels must be part of a wider overhaul, such as the Alliance's Hybrid Business Rate, which would create a broader tax base by ensuring all firms, including online, pay their fair share," Morgan said.
She added that this would help to dramatically reduce the burden on businesses with physical premises, and said the review should be used as an opportunity to move beyond piecemeal reliefs and start designing a business rates system fit for the modern economy.
