​170 Hospitality CEOs Demand Permanent Business Rates Relief

As the Autumn Budget approaches, over 170 leaders from the UK’s hospitality industry are urging the government to implement lasting reforms to business rates, warning that the sector could face a financial cliff edge when the current relief scheme expires in March 2025. The open letter, addressed to the Chancellor, is backed by senior figures from renowned businesses such as Pizza Pilgrims, Fuller’s, Greene King, and JD Wetherspoon, representing a wide spectrum of the hospitality sector.

The letter highlights the precarious situation facing many high street businesses and calls for the introduction of a new, permanent, and universal business rates multiplier for the hospitality sector. The leaders argue that without this intervention, high street businesses will see their rates bills skyrocket, threatening widespread closures, job losses, and stifled investment at a critical time for economic recovery.

The hospitality industry, one of the sectors hardest hit by the COVID-19 pandemic, is still recovering from the prolonged periods of forced closures, social distancing measures, and reduced consumer confidence. Although the government introduced temporary business rates relief during the pandemic, this measure is set to end on 31 March 2025, leaving businesses vulnerable to a sudden increase in their tax liabilities.

Currently, the hospitality sector benefits from a 75% reduction in business rates. However, this relief is due to expire, prompting fears that many operators will struggle to absorb the sharp rise in costs. According to UKHospitality, the industry could face an additional £914 million in business rates bills, a burden that many businesses may not be able to withstand.

“The expiration of business rates relief will come at a time when many businesses are just beginning to regain their footing,” said Kate Nicholls, CEO of UKHospitality. “Without urgent reform, this will create a devastating financial shock for the sector, potentially pushing many high street venues into insolvency.”

Business rates are a significant tax on non-domestic properties, calculated based on the rental value of a business’s premises. For brick-and-mortar establishments like pubs, restaurants, and hotels, this tax represents a substantial operating cost that is particularly burdensome for businesses in prime locations. The system, critics argue, disproportionately impacts high-street businesses compared to their online competitors, which often face lower overheads.

The letter from hospitality leaders asserts that the current business rates system discourages investment in high streets, as the cost of opening and maintaining additional premises becomes prohibitive. They also highlight the growing disparity between high street businesses and online operators, which pay significantly lower rates due to the nature of their operations.

“This Budget is the last chance to prevent bills quadrupling for high streets across the country,” the letter warns. “We propose that your Government introduces a new lower, permanent, and universal multiplier for the hospitality sector, to be adopted across all nations of the UK.”

The hospitality sector has long been recognised as a critical driver of local economies, particularly in towns and cities where pubs, restaurants, and hotels provide jobs, attract tourists, and foster vibrant communities. The letter warns that the UK risks losing many of these vital community hubs if business rates relief is not extended or replaced with a fairer system.

Kate Nicholls added: “Inaction will lead to bills quadrupling and more venues shutting their doors for good, robbing our towns and cities of essential social and economic spaces. If we don’t want to lose out on vital investment, job creation, and the regeneration of our high streets, the Chancellor needs to act decisively.”

A bi-monthly survey of over 500 mid-sized businesses by advisory firm BDO also emphasised the need for reform. The survey revealed that 18% of businesses support replacing business rates entirely, while 27% of retailers desire a business income tax system to replace the current rates.

Richard Austin, partner at BDO, stressed the importance of the sector’s contribution to the UK economy: “Accounting for one in three private sector jobs and generating revenues of £1.6 trillion, the contributions of these businesses should not be overlooked by policymakers. The hospitality sector’s ability to scale up and recover post-pandemic is essential for the wider economy.”

The letter’s key demand is for the government to introduce a lower, permanent, and universal business rates multiplier for the hospitality sector. This change would reduce the tax burden on high street businesses, making it more viable for them to expand and invest in additional premises. The current system, which uses the September Consumer Price Index (CPI) as a multiplier to calculate annual rate increases, has been criticised for creating unpredictable and unsustainable costs for hospitality businesses.

Under the proposed changes, hospitality businesses across the UK would benefit from a level playing field, encouraging investment in high streets and helping to create new jobs. Removing the cap on business rates relief would also incentivise businesses to open additional premises, which is currently viewed as an unaffordable option for many operators.

As the Chancellor prepares to deliver the Autumn Budget, the future of the hospitality industry hangs in the balance. The sector is calling on the government to deliver on its manifesto commitment to reform the business rates system and support the recovery of high street businesses. Without action, the risk of closures, job losses, and reduced investment could have far-reaching consequences for the UK economy.

The hospitality sector remains a key pillar of British high streets and local communities, but the threat of soaring business rates could jeopardise its future. The letter’s 170 signatories hope that by acting now, the government can prevent a crisis and support a sector that plays such a vital role in the nation’s economic and social fabric.