The Government has confirmed that Andy Burnham’s pledge to provide additional Business Rates support for most pubs and some music venues will be introduced from April 2027 with the new 20% reduction sitting alongside the existing 15% relief.

While any additional support will be welcomed by businesses facing sustained cost pressures, questions remain over how the relief will be applied, funded and whether targeted interventions offer a long-term solution to wider problems within the Business Rates system.

Who stands to benefit?

The Government advises that around 32,000 businesses currently benefit from the 15% relief, with most expected to continue receiving support. However, England’s Rating List contains around 36,000 pubs, before live music venues are included, meaning many properties will remain excluded due to factors such as pubs which only offer table service and those which don’t allow drinks to be purchased at a bar. Vacant pubs are also excluded.

Eligibility rules also prevent pubs that only serve drinks with food from qualifying, despite operating as pubs in practice.

Funding the reduction

The additional relief is expected to cost more than £100 million annually. While ministers have suggested funding could come from removing rates reliefs for vape shops and tightening VAT measures for some online marketplaces, it’s uncertain whether these measures alone will generate enough revenue to cover the bill.

There remains concern around the existing large property supplement, which applies to properties with a rateable value of £500,000 or more and has the capacity to rise, according to the legislation which introduced it. HM Treasury has confirmed only that the supplement is under review, with any changes expected to be announced at the Budget.

The challenge with targeted intervention

Business Rates relief is always welcome, particularly given the importance of pubs to local communities. However, many other sectors, including hotels, leisure businesses, schools and healthcare providers, continue to face similar financial pressures.

A broader reduction in Business Rates could provide a fairer, simpler and more sustainable approach. Lowering the multiplier for all businesses would reduce reliance on the growing number of reliefs, supplements and exemptions that have made the system increasingly complex. However, current policy continues to favour targeted support over wider reform.

Funding relief in one sector by increasing costs in another also risks distorting the market. The logistics sector illustrates this challenge with many operators working on tight margins, so higher Business Rates could increase supply chain costs, ultimately affecting businesses and consumers. As pubs depend heavily on these supply chains, higher logistics costs could offset much of the benefit they receive through rates relief.

Wider implications for businesses

The same concern applies to online marketplaces. While larger platforms may appear obvious targets, many smaller retailers also rely on online sales. Broad measures could therefore have unintended consequences for smaller businesses and consumers alike.

If the winners and losers from these interventions were completely independent of each other, there may be more clarity of the impact, but in the present case, pubs rely upon supply chains, so if logistics costs rise due to intervention, this dilutes the benefit being given to those pubs and their customers

Removing or significantly reducing the Business Rates burden for important community assets such as pubs and music venues is not so much helping them to thrive, but helping them to survive, providing they know what they can or cannot claim.

However, any reduction shouldn’t simply result in costs being transferred elsewhere across the economy as this ushers in increasingly complicated calculation, supplement and relief structures to the system, creating not only variable cost pressures but also far greater unpredictability.

The Business Rates system has become overly complicated. A broader, more transparent reform would provide greater certainty for businesses, reduce market distortions and better support the long-term health of the UK economy.

Further information

Contact David Parker

For more information on Business Rates, please click here