More than 5,000 pubs facing sharp business rate hikes as tax valuations double

More 5,000 pubs are set for sharp jumps in business rates after their property tax valuations doubled following the autumn budget, the boss of a Government agency has warned.

Jonathan Russell, chief executive of the Valuation Office Agency, confirmed a significant increase in the figures used to calculate property taxes for pubs at Parliament’s Treasury Select Committee on Tuesday.

It comes after weeks of criticism from pub bosses, industry chiefs and politicians over changes to business rates in the Budget announced in November.

In the Budget, the Chancellor announced a reduction in the multiplier used to calculate business rates payments for UK businesses.

However, the Treasury also confirmed that it would phase out Covid-era discounts for retail, leisure and hospitality businesses, which mean property taxes for these firms are cut by up to 40%.

Ministers confirmed a £4.3 billion fund to help provide transitional relief as these discounts phase out, but this will only run until 2029.

Alongside these changes to business rates calculations, businesses will also see their taxes impacted by new property valuations.

Valuations based on calculations from 2024 will take effect when the new financial year begins in April.

While some properties have seen their valuations fall, most businesses in the hospitality sector have seen valuations jump due to a rebound in trade following the coronavirus pandemic.

On Tuesday, Mr Russell said 5,100 pubs have seen their properties’ rateable valuations rise by at least double.

He said that pubs have seen valuations jump by an average of 32% but stressed that around 15% have seen their valuations fall.

Mr Russell said: “There has been an increase but if you go back to the 2017 list, the rateable change between 2017 list and 2026 list is about 8%.

“There was an obvious blip linked to Covid, which had an impact on trade and rentable evidence, so that had an impact on valuations.”

Last week, Labour ministers confirmed that the Government is proposing new financial support for pubs following recent criticism.

The Government has yet to confirm the size and scope of any new support measures.

Emma McClarkin, chief executive of the British Beer and Pub Association, said: “This illustrates just how sharp a rise some pubs will feel from April.

“Many of these closures are the inevitable result of a heavy tax and rates burden, which is why it’s never been more vital for a pub-specific business rates relief.

“It’s key for jobs and communities that we do not lose our cherished locals and we await the detail in the Government’s announcement.”