Budget delivers permanent cut to business rates

The chancellor announced a permanent cut to business rates as part of the eagerly awaited budget. During her address to parliament, Rachel Reeves said that the government will introduce permanently lower tax rates for over 750,000 retail, hospitality and leisure properties, paid for through higher rates on properties worth £500,000 or more, such as "warehouses used by online retail giants". The government says the cut is worth nearly £900m a year from April 2026.

The move will be seen as addressing one of the ‘big three’ issues raised by the hospitality industry in the build-up to the budget. The other two, which weren’t mentioned, being a cut in VAT and reversing the employer National Insurance Contributions hike, announced in the chancellor’s previous budget. 

'Deeply concerning'
Chris Gamm, chief executive officer of Springboard, said: "With the minimum wage set to increase and a freeze on income tax and national insurance thresholds extended, we expect entry-level hospitality roles to decrease and further job losses to follow. We also predict the long-term effects of this will mean, in time, there will be a shortage of future managers and leaders.

"This will put immense pressure on the sector and on charities like Springboard, which are committed to training and supporting people into work. We urge the government to work closely with us and the wider industry to ensure adequate support is put in place to protect jobs, sustain training and development, and safeguard the long-term resilience of this essential sector."

Kate Nicholls, chair of UKHospitality, commented: “The chancellor recognised the importance of hospitality and provided a permanently lower multiplier for hospitality businesses – reforms secured by UKHospitality. However, the 5p discount is only a quarter of the maximum 20p discount the government proposed last year.

“This is particularly frustrating given changes to business rates valuations will mean that many hospitality businesses’ tax bills will still significantly rise, alongside increases to the minimum wage adding extra cost. Business tax rates for hospitality must continue to fall for the rest of this parliament.

“Hospitality remains under significant cost pressures, with the highest tax burden in the economy. We will continue to campaign for additional support for the sector, including further business rates discounts.”

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