Hospitality Industry: Business Rates and VAT
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential impact of (a) VAT and (b) business rates on the hospitality sector.
Answered by Dan Tomlinson
In April 2026, the Government will introduce permanently lower business rates multipliers for retail, hospitality, and leisure properties with ratable values below £500,000. This permanent tax cut will ensure that eligible hospitality businesses, including pubs, benefit from much-needed certainty and support.
Ahead of the new multipliers being introduced, the Government prevented RHL business rates relief from ending in April 2025, extending it for one year at 40 per cent up to a cash cap of £110,000 per business.
Business rates are a vital source of Local Government funding and support critical local services, including children's and adult social care. As such, the Government has no plans to abolish business rates for pubs.
VAT is a broad-based tax on consumption that applies to most goods and services.
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