Hospitality businesses warn of sharp rise in bills if rates relief ends

By James Bayley

Published: 16 September, 2024

Hospitality and leisure businesses face a fourfold increase in their bills, potentially adding tens of thousands of pounds to costs per venue, if business rates relief ends on 31 March.

A local pub could see an increase of £11,000, a town centre restaurant may face an extra £30,000, and a seaside hotel could experience a rise of £40,000.

UKHospitality is urging the Chancellor to introduce a new lower, permanent rate for business rates in the hospitality sector in the upcoming Budget. The current system is criticised for placing a disproportionate burden on hospitality businesses, with the sector paying three times more than it should. Labour has committed to replacing the current rates system to balance the competition between the high street and online businesses.

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Kate Nicholls, chief executive of UKHospitality, said: “Hospitality businesses are facing a devastating cliff edge next April, when many will see their bills quadruple.

“The scale of this almost billion-pound tax bombshell is just not viable. Many will face the risk of closure, be forced to let people go, or abandon their investment plans.”

She added: “There has to be a solution that avoids this cliff edge, and a lower, permanent and universal multiplier for hospitality would deliver that. It would give certainty and stability to businesses, allowing the government to begin delivering on its own manifesto commitments.”

Operators across the sector have voiced concerns about the damaging impact of the relief ending without a suitable replacement, warning of threats to jobs, investment, and local communities.

Gordon Forster, owner of Safari Play Venues in Milton Keynes and Peterborough, said business rates already account for up to 10% of their turnover. He estimates they will face £95,000 in additional rates if relief ends. “Not addressing business rates could destroy many hospitality and leisure businesses,” Forster warned. “We’ve put everything on the line to survive, including our house.”

Roxane Marjoram, co-owner of several pubs in Suffolk, said the potential quadrupling of rates bills fills her “with dread.” She explained: “Even though we’re operating in an environment with significantly higher costs post-Covid, pubs and restaurants like ours can and will play a strong part in economic recovery if we’re supported with fair rates bills.”

Tim Hassell, who runs the Thurlestone Hotel in Devon, would need to find £110,000 if relief ends in April. He said: “The current business rates system unfairly penalises property-based businesses like ours. It’s in dire need of reform.”

The call for action from UKHospitality and its members is clear – without reform, the sector could face a financial crisis when relief ends, threatening jobs, investment and communities across the country.

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