Hospitality pleads for ‘lifeline’ as Rachel Reeves accused of imposing ‘stealth tax’

Despite the chancellor’s claim in the recent budget that she is supporting small retail and hospitality businesses, many firms are now facing steep and unexpected increases in their business rates.

During her address in the House of Commons, the chancellor announced “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties – the lowest since 1991.” Earlier this year, the government granted itself the ability to significantly reduce business rates for high street businesses, but the budget delivered only a fraction of the relief available. This has led to criticism that the government is effectively introducing a “stealth tax.”

As a result, many small retail, hospitality and leisure operators are questioning whether their businesses will remain viable beyond April next year.

A Treasury spokesperson defended the budget, stating: “We’re protecting pubs, restaurants and cafés with the budget’s £4.3bn support package – capping bill rises so a typical independent pub will pay around £4,800 less next year than they otherwise would have.” They also pointed to reduced licensing costs, continued cuts to duty on draught pints, and corporation tax caps.

Industry groups had hoped that the chancellor would remove the remaining temporary reliefs and introduce broader reforms to shift more of the tax burden onto larger companies, including major warehouse operators like Amazon. Instead, the budget introduced a modest 5p-in-the-pound discount for small businesses—far below the anticipated 20p reduction many had been lobbying for.

For many businesses, this small discount is overshadowed by substantial increases in government-assessed property values. These rising valuations are pushing business rates far beyond what many firms were previously paying.

One example comes from pub owner Sam Carroll, near Hull, who has seen the rateable value of one of his venues jump from £67,000 to £110,000 within three years—a 64% increase. He explained to Sky News that questions about long-term viability are constant. Even with their pubs busy seven nights a week, breaking even remains a challenge.

Although a phased discount will ease businesses into the higher rates, most will be paying close to the full amount by the third year. As Mr. Carroll bluntly put it, the change feels like “being hit slowly instead of all at once.”

(SKY NEWS)