Chancellor Rishi Sunak declared an extension to the full business rates holiday for all hospitality businesses until June and then two-thirds off for the remainder of the financial year.
However, a cap of £2m on relief available to individual firms will jeopardise many businesses with either large sites or venues in high rental areas, UKH has said.
According to analysis by UKH, almost 8,000 venues - employing around 343,000 people - will be forced to pay full rates in July.
What’s more, an additional 1,850 venues will experience the same before the end of September.
Operators may be forced to consider cutting costs by shutting sites, slashing jobs or holding off on investment projects, the trade body said.
The policy is also likely to penalise operators who have made previous investments into improving their sites, limiting their recovery post-lockdown.
The association is calling on the Chancellor to extend the period for which the full rates relief would apply from three to six months and then reduce the level of relief to 50% for the rest of the year.
UKH boss Kate Nicholls said: “While the Budget was broadly positive for the hospitality sector with a range of welcome measures, the cap on business rates support really took the shine off things, by excluding so many potential recipients."
She added: "The cap comes into effect just days after trading restrictions are due to be lifted and will put a major economic drag on the businesses affected and risk the jobs that they support.
“For all ratepaying hospitality businesses, their bills will begin landing in June, with demands for payment before they are back on their feet. July is simply too early for businesses to be expected to start repaying rates after a devastating year of closure, restrictions and accumulation of debt.
“Hospitality stands ready to play its part in creating new jobs and boosting our communities across the country, but this policy risks strangling the recovery in its infancy. Our proposed solution can unleash greater economic activity and we urge the Treasury to follow Wales and Scotland’s lead and provide greater relief.”