Business rates cut by 20% for pubs and clubs

Sara White, Editor, Business & Accountancy Daily. Croner.

Pubs, clubs and live music venues will see a 20% reduction in business rates from next year saving the typical pub around £1,100.

In a busy first few days in office, latest announcement sees the prime minister Andy Burnham confirm 20% cut in business rates from April 2027 for pubs, social clubs and smaller live music venues, benefiting around 32,000 businesses and costing £100m a year.

The measure will only apply to venues in England, not the rest of the UK as business rates are devolved to Scotland, Wales and Northern Ireland.

This reduction is on top of the earlier 15% discounted rate for these premises announced by the previous chancellor Rachel Reeves at last autumn’s Budget.

Announcing the measure, the PM’s office said the discount would ‘provide much-needed certainty for businesses looking to invest, grow and create jobs’. It will exclude the ‘very largest live music venues’ but further details are not available yet.

Business rates have nearly doubled for some of these businesses since the recent revaluation, putting added pressure on the sector after above-inflation rises in the national minimum wage for the last two years and hike in employer national insurance bills, particularly for lower paid workers.

The latest 20% cut for 2027/28 comes on top of the current 15% reduction in 2026/27 business rates for this group, which was announced in January, with bills frozen in real terms for a further two years.

Reacting to the temporary relief, Helen Miller, director of the Institute for Fiscal Studies (IFS) said: More business rates relief for pubs and music venues is a continuation of a theme. Business rates used to be simple (one rate) and stable. Now there are many rates and constant tinkering. This is not a welcome development ‘With the new (temporary) 20% relief for pubs and clubs, government is not creating a level playing field, it’s simply choosing to favour some businesses (pubs, music venues) over others (larger businesses, warehouses, etc).’

But tweaking at the edges does not solve inherent problems with the structure of business rates, with calls for an overhaul of the business rates system. Adam Barnfield, head of business rates at property consultancy Vail Williams, said: ‘Business rates have become increasingly reliant on temporary discounts, exemptions and relief schemes to address shortcomings in the system. While these measures provide welcome short-term support, they don’t solve the underlying problem.

‘The business rates system has become overly complex, difficult for occupiers to understand and increasingly disconnected from the realities of today's economy. Every Budget seems to introduce another layer of relief rather than addressing the root cause. What businesses need is certainty. A simpler, fairer and more transparent system would give occupiers the confidence to invest, rather than waiting to see whether their sector qualifies for the latest relief.’

While the temporary rate cut gives an indication of priorities for the new Burnham government, Dean Stevens, partner at HW Fisher, warned: ‘It’s very unlikely a 20% business rate cut turns out to be the saving grace some are hailing it as. The reality is that this, like so many other policies, will mainly benefit the biggest players – those making millions that have already been weathering the storm more successfully than smaller setups.

‘The local, independent pubs and music venues that form the core of communities need far more targeted support if they’re to recover from recent fiscal measures.

‘Pressure has been mounting on small- and medium-sized clubs, pubs and chef-led groups for years. And while I’m pleased to see the government taking small steps toward reviving these industries, I just hope there is more to come.’

The government is actutely aware of the issues facing businesses and said it plans to reform small business rates relief (SBBR) with details to be announced at the Budget this autumn.

With a Budget unlikely before November, it is not clear how the latest 20% cut will be funded from the new tax year, albeit it is a temporary relief.

The government stressed the measure ‘will be fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops’. It will also go ahead with Rachel Reeves’ plan to clamp down on online marketplaces which allow non-compliant sellers to evade tax obligations with tougher rules, currently out for consultation until 18 August.

Prime minister Andy Burnham said: ‘For too long, governments have stood by while cherished venues have disappeared from our local high streets. So today I am changing that.

‘This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do. What we’re announcing today is just the start as we work to bring back hope across the country.’

There was positive reaction from major pub groups. Nick Mackenzie, CEO at Greene King said ‘pubs have long faced disproportionately higher business rates and today’s announcement is much needed relief. It’s hugely encouraging that the prime minister has chosen to prioritise our sector in his first few days in office.’

Jonathan Neame, chief executive of Shepherd Neame, added: ‘This is a sensible step that will provide a welcome boost to businesses facing significant cost pressures.’

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