New business rates reform law a 'landmark moment' for hospitality

Legislation that will enable a long-awaited overhaul of the business rates system has become law.

The government has committed to reform the tax and has promised to introduce two permanently lower rates for retail, leisure and hospitality properties from 2026/27.

Chancellor Rachel Reeves previously said this would be paid for by a higher multiplier on the “most valuable properties”.

The Non-Domestic Rating (Multipliers and Private Schools) Act received Royal Assent earlier this month and further details of the changes will be confirmed in the autumn.

UKHospitality is asking for the maximum discount to be applied to hospitality properties with a rateable value of less than £500,000. It is also calling for hospitality properties with a rateable value over £500,000 to be exempt from the surcharge, in line with the government’s intention to level the playing field for the sector.

Kate Nicholls, chief executive of UKHospitality, said: “After UKHospitality campaigned for substantial business rates reform for years, legislation making this a reality is a landmark moment.

“We’re delighted that the government is taking action to level the playing field for the hospitality sector.

“With the finer details set to be unveiled in the Autumn, the government now needs to ensure this is meaningful by offering the maximum discount for hospitality businesses, after decades of paying significantly more than their fair share. It should also exempt hospitality businesses from the surcharge.

“A permanently lower level of business rates will truly benefit hospitality businesses and, crucially, rebalance a system that has unfairly overtaxed the high street by billions of pounds.

“Whilst we remain optimistic about business rates reform and its ability to give operators some of the financial respite they desperately need, this unfortunately won’t scratch the surface of the £3.4bn annual cost increases hitting the hospitality sector this month.

“We are urging the government to work with us to enable hospitality businesses to unlock growth and jobs.”

The 75% discount on business rates for hospitality, retail and leisure businesses was reduced to 40% in April, up to a maximum of £110,000 per business.