Every business rates announcement of the last two years has been a discount. A 15% cut earlier this year, a 20% cut on top of it from next April, Covid-era reliefs tapered away and then partly put back. All of them argue about the size of the discount. This morning's announcement is the first one in a long while that argues about the sum, and that makes it the more important of the two by a distance.
Here is my position, plainly. A pub's rates bill is not high because the multiplier is high. It is high because a pub is one of the very few property classes in the country whose rateable value is built out of its own trading figures. Discount that number by 20% and you have a smaller version of the same problem. Change how the number is produced and you have changed the bill for every pub and hotel in England and Wales for a generation. The catch — and it is a real one — is that this review reports in March 2027 and feeds a revaluation that does not take effect until 2029. Nothing on your bill moves for three years.
What was actually announced
The Treasury has launched a review into how business rates are calculated for pubs and hotels in England and Wales. Per the BBC, it will be led by Jerry Schurder, a former business rates policy lead at advisory firm Newmark UK, and he reports back by the end of March 2027. His findings feed into the next rates revaluation in 2029. A call for evidence is open alongside it, and City A.M. reports the government is inviting landlords, brewers, hoteliers and business owners to respond.
James Murray, financial secretary to the Treasury, framed it as "a rethink of valuations — so that we can build a fairer system for the future". Schurder's own stated remit, quoted by City A.M., is to "assess how the current valuation methodologies for pubs and hotels operate in practice and whether they remain fit for purpose". That word — methodologies — is the whole story.
The context is not good. The British Beer and Pub Association told the BBC that 161 pubs closed in the first three months of this year across England, Scotland and Wales, costing around 2,400 jobs. Rising rates are one cause among several; higher employer National Insurance and a higher minimum wage are doing at least as much damage to the cost line.
Why a pub's rateable value behaves differently from everyone else's
For most commercial property, rateable value is an estimate of open market rent. GOV.UK is explicit that the 2026 rating list is built on open market rental value at 1 April 2024. A warehouse is valued on what that warehouse would let for. Turnover does not enter the calculation.
Pubs are not valued that way. The Valuation Office's own rating manual states that traditional public houses are valued by reference to fair maintainable trade, with percentage rental bids applied to the separate income streams that make up that trade — wet sales, food, accommodation, machines — varying by location, age, modernity and style of operation, as set out in the Approved Guide to the Valuation of Public Houses.
Hotels sit in the same family. The manual says the schemes used for branded, major chain and larger independent hotels "apply a single percentage to total Fair Maintainable Trade (FMT) to arrive at the RV". Smaller hotels are valued on rental evidence using double bed units instead — under 50 bedrooms in Central London, or under 20 outside it, unless the property is boutique or luxury in character.
So both classes named in this review are valued off trade, and almost nothing else is. Jonathan Lawson, chief executive of the Butcombe Group, which runs 120 pubs across the south and south west, put the consequence to the BBC's Today programme in three words: pubs are "punished for success". He contrasted it with large online retailers operating out of warehouses, whose rates, he said, "are calculated based on what is deemed to be the market rent for that area, and takes very little on board in terms of revenue driven through that site".
The bit the coverage gets slightly wrong
You will read that a pub's rates bill rises when its turnover rises. That is true across revaluation cycles and false within one, and the difference decides what you do this month.
The rating manual is specific: the trade figures adopted for a compiled list represent the annual trade considered maintainable at the antecedent valuation date — and it is the trade a reasonably efficient operator could achieve at that property, not the trade you personally achieved. Your 2026-27 bill therefore reflects what your pub could have sustained on 1 April 2024. A strong July this year does not raise it. What a strong July does is add to the evidence base the Valuation Office will use to set the 2029 list. The growth penalty is real; it just arrives with a three-year delay, all at once, in a single revaluation letter.
What that costs, worked through
An illustration, from published figures rather than a client file. Take an English pub with fair maintainable trade of £600,000 and a rateable value of £30,000 — a 5% relationship between trade and rateable value. GOV.UK puts retail, hospitality and leisure property under £51,000 of rateable value on a 38.2p multiplier for 2026-27, and a pub is expressly on that list. Now grow the trade by £100,000 and hold that 5% relationship and the 38.2p multiplier constant, so the only thing changing is success.
| 2026 list | Same pub, trade up £100k | |
|---|---|---|
| Fair maintainable trade | £600,000 | £700,000 |
| Rateable value at 5% | £30,000 | £35,000 |
| Rates at 38.2p | £11,460 | £13,370 |
| Less 20% pub relief | −£2,292 | relief not confirmed beyond 2027-28 |
| Bill | £9,168 | £13,370 |
Read the middle row and the bottom row together. Growing trade by 16.7% adds £1,910 to the rates bill. The 20% relief everyone is celebrating is worth £2,292. So that growth hands back 83% of the entire relief at the next revaluation — and the relief is a discount with no confirmed life beyond 2027-28, while the higher rateable value sits in the list until 2034. A distribution unit doing the same £100,000 of extra revenue sees its rateable value move by nothing at all, because its valuation follows rents in its area rather than receipts through its tills.
For hotels the arithmetic is starker, because hotels were left out of the 20% cut altogether. A hotel on a £45,000 rateable value pays £17,190 a year at 38.2p with no hospitality discount attached to it. This review is not one of two things on the table for hoteliers. It is the only thing on the table.
Which of these is you
A traditional pub or inn. You are the intended subject. Your entry on the rating list will carry special category code 226, 227 or 062, and your valuation is built from trade. Every argument in this review is about your bill.
A bar in converted premises. You may be outside the trade-based method entirely. The manual allows bars in new developments or converted premises to be valued on floor space where rental evidence supports it — special category code 303 — and it says outright that the interface between the two approaches "is not always clear or straightforward". Knowing which basis you are actually on is worth ten minutes.
A hotel. Your position depends on whether you are valued on receipts or on double bed units, and the bedroom thresholds above decide that. A 30-bedroom hotel in Leeds with a bar and restaurant is on receipts. A 15-bedroom one is not.
A restaurant, cafe, gym or shop. This review does not cover you, and neither did the 20% cut — we went through exactly who counts as a pub when that was announced. Craig Beaumont of the Federation of Small Businesses used the BBC's coverage to press for the wider fix that would help you: a higher small business rate relief threshold. No 10 has said further reform, including small business rates relief, will be set out at the autumn Budget.
Two things to do this week
1. Read your valuation, not just your bill. Your rateable value and the detail behind it are free to look up at GOV.UK's business rates search. For a pub, the part that matters is the trade the Valuation Office has assumed and the category it has put you in — a bill built on trade you could not sustain at 1 April 2024 is wrong at source, and the route to fixing it is the business rates valuation account, with the process set out in GOV.UK's Check and Challenge guidance. Reporting a change to your property can be done at any time.
2. Put your evidence into the call for evidence. Landlords, brewers, hoteliers and business owners are explicitly invited, and the review runs until March 2027. Treasury calls for evidence are published on GOV.UK's Treasury consultations page. A page of your own numbers — what your rateable value is, what trade it assumes, what you actually took — is worth more to a review like this than another trade body press release, and this window does not reopen before 2029.
What is still unknown, and when you will know it
Schurder reports by the end of March 2027. There is no commitment yet that his recommendations will be adopted, and "feed into the next revaluation" is not the same as "change the method". The near-term date that matters more is Chancellor John Healey's first Budget this autumn, which is where the eligibility definitions for the 20% pub relief land and where any change to small business rate relief would be announced.
One geographic point, because we have clients on both sides of it. Scotland and Northern Ireland set their own valuations. Wales presently aligns its methodology with England, which is why the review covers both. If you run a pub in Northern Ireland, a change in England is an argument you can point at, not a change to your bill.
The practical job in the meantime is unglamorous and it is the one that pays: know what your rateable value assumes, model the 2029 list on the trade you are actually building towards rather than the trade you had in 2024, and stop treating reliefs as income. That is ordinary cashflow and budgeting work sitting on top of proper management accounts. If you run a pub or a hotel and you have never seen the trade figure behind your own valuation, tell us what you have got and we will come back the same working day.