Government announces targeted business rates support measures for pubs and music venues

Pubs and music venues in England will be given a 15% discount on their business rates bills from April and will not see increases for two years. It comes after a backlash against November’s Budget, which left many facing major increases in their business rates bills, and led to more than a thousand pubs banning Labour MPs from their premises. This came alongside a hike in the minimum wage and an increase in employer national insurance contributions. The Government also promised to review how pubs are valued by the Valuation Office Agency (VOA), ahead of the next revaluation of premises in 2029.

Pubs have faced significant pressure as their numbers have fallen by nearly 7,000 since 2010, a roughly 15% reduction and amongst the highest across hospitality overall. The sector has also raised concerns around the way they are valued for business rates purposes.

The Government is introducing a support package to save the average pub an additional £1,650 in 2026/27. Around 75% of pubs will see their bills fall or stay flat over the same year, with the pub sector as a whole paying 8% less in business rates in 2029 than they do currently.

Chancellor of the Exchequer Rachel Reeves said, “If we’re going to restore the pride in our communities, we need our pubs and our high streets to thrive. We’re backing British pubs with additional support, and our new High Streets Strategy will help tackle the long-term challenges that our much-loved retail, leisure and hospitality businesses have faced. Thriving local businesses, bustling high streets and pride restored in our communities – that’s what this Government is delivering.”

Other sectors continue to benefit from the £4.3 billion support package and from permanently lower tax rates for eligible retail, hospitality and leisure properties.

The Government is also launching a review into how they are valued. The review will be carried out by the Government alongside businesses and their representatives, as well as valuation experts, ensuring that any decisions that follow will be implemented for the 2029 revaluation.

Anna Leach, Chief Economist at the Institute of Directors, said “The Institute of Directors welcomes today’s decision by the Government to provide targeted business rates relief for pubs, recognising the intense pressures facing this sector. This support will offer much-needed breathing space for businesses grappling with rising costs and tight margins.

“More broadly, the business rates system remains in urgent need of reform to address the disincentives to investment embedded in the current framework, and we welcome the Government’s commitment to take action in this area.

“That said, stronger policy design at an earlier stage would deliver greater benefits for business confidence, planning and costs. We reiterate our call for more detailed, sector-by-sector analysis of the impacts of tax changes to be undertaken alongside each Budget. This would allow concerns to surface earlier in the process, enabling risks to be identified and addressed before they crystallise.”

Federation of Small Businesses (FSB) Policy Chair, Tina McKenzie, said “The Government has passed up a critical chance to back struggling high street businesses.

“Although this news will bring a welcome, temporary reprieve for pub and music venue owners, small firms across the rest of the hospitality, leisure and retail sectors – from your local greengrocer, hairdresser and café to the nail bar or florist – will be incredibly disappointed to not have been thrown any type of lifeline. It’s worrying that the Government repeatedly fails to recognise the difficulty that these businesses are in.

“Losing the previous 40 per cent discount, on top of April’s revaluation of the rateable value of premises, and changes to the formula behind the bills, will take a heavy toll on small firms, threatening jobs and our high streets. A typical small bakers or dry cleaners will face a 52 per cent increase in its business rates bill over the next three years.

“The Government has the power to apply the full business rates relief already built into the system across the sectors, yet it has used this moment to exclude wider hospitality, retail and leisure. It also has the opportunity to raise significant extra revenue from the largest business premises, but has instead decided to impose the biggest increases on small high street bakers, gyms and restaurants.

“With more cost pressures due to hit in April alongside the rates rise, from energy standing charges to employment costs, this situation is becoming unsustainable for many. Some are having to put the brakes on expanding and developing their business, while others are being forced to lay off staff or even close their doors for good. The Treasury must look again at the Spring Forecast to provide substantial help for these struggling small firms.”

Anna Leach, Chief Economist at the Institute of Directors, said “The Institute of Directors welcomes today’s decision by the Government to provide targeted business rates relief for pubs, recognising the intense pressures facing this sector. This support will offer much-needed breathing space for businesses grappling with rising costs and tight margins.

“More broadly, the business rates system remains in urgent need of reform to address the disincentives to investment embedded in the current framework, and we welcome the Government’s commitment to take action in this area.

“That said, stronger policy design at an earlier stage would deliver greater benefits for business confidence, planning and costs. We reiterate our call for more detailed, sector-by-sector analysis of the impacts of tax changes to be undertaken alongside each Budget. This would allow concerns to surface earlier in the process, enabling risks to be identified and addressed before they crystallise.”