Yet as the 2026 business rates revaluation approaches, many operators now face a challenge as severe as any they encountered during Covid: the risk that the tax system itself renders otherwise viable pubs unsustainable.
At the heart of the issue is how valuations have been determined. The current 2023 List was based on fair maintainable trade (FMT), effectively turnover from 2019 with Covid adjustments applied depending on pub category. It was far from perfect, but it recognised the abnormal trading environment the sector had endured.
The 2026 revaluation moves to a new footing: actual turnover achieved in 2023/24. The Government has long preferred turnover-based valuations for pubs, arguing that headline revenue is a fair proxy for rental value. But this principle has broken down because the cost of generating that turnover has risen dramatically, while valuations do not reflect those cost pressures at all.
This has already produced extreme results. A pub in Wandsworth has seen its rateable value jump from £16,750 to £121,000, a 622% increase.
Another in north London has risen from £18,500 to £118,000, up 538%. The Shakespeare in Derby faces a rise of over 500%, turning a modest community pub into a business with a tax liability that bears no resemblance to its economic reality.
These examples exclude small businesses that previously benefited from small business rates relief. They reflect pubs that were already paying full rates and have now been hit with the steepest increases.
Those dramatic rises land at the worst possible moment. From 1 April 2026, the expanded retail, hospitality and leisure (RHL) relief, currently worth 40% off the bill and capped at £110,000 per business, is abolished.
Deeper flaw
The Government has pointed to a reduced multiplier in 2026 as partial mitigation, but the sums do not stack up. The loss of 40% relief dwarfs the modest benefit of a slightly lower multiplier. For most pubs, bills are going up and sharply.
But the deeper flaw is that the valuation system is rooted in turnover rather than profitability. Between the two Antecedent Valuation Dates (2021 and 2024), costs have risen across every part of a pub’s operation:
• steep supply chain and product inflation
• higher wages and staffing costs
• increases in alcohol duty
• rising employer national insurance contributions
• utilities volatility
• persistent recruitment challenges
• the withdrawal of pandemic-era support and reliefs
These pressures are visible in every major economic indicator affecting the sector. Between 2021 and 2024, food and drink input costs rose by more than 30%, energy prices remain around 70% higher than pre-pandemic levels despite easing from their 2022 peak, and wage costs increased by more than 20% because of national living wage uplifts and staffing shortages.
Alcohol duty rose by 10.1% in 2023, while benchmarking data shows average operating margins in pubs have fallen from 12 to 15% pre-pandemic to around 4% today. Even where turnover has recovered, many pubs are seeing operating profits down 20 to 30% in real terms once inflation is accounted for.
In short, a pub can now match or exceed its 2019 revenue yet be materially worse off, but the valuation system treats that higher turnover as if it reflects higher profitability.
This is why we are warning that many pubs may not be economically feasible from April 2026. The timing is stark. Without immediate reform, 2025 could be the last Christmas for many publicans, taking jobs, footfall, and the village meeting place with them, and once they’re gone, the community rarely gets them back.
A pub closure is never just a business failure. It means the loss of a social anchor, a point of connection, a source of local employment, and a cultural asset that is almost impossible to replace.
There is a more accurate and fair alternative. We are increasingly seeking to value pubs on a full receipts and expenditure (R&E) basis a method that considers the actual trading performance of the business, including its specific cost base, margins and viability.
Valuation method
It provides a truer reflection of what a tenant could reasonably afford to pay in rent. Crucially, it recognises that turnover alone is not an indicator of success or sustainability.
For many pubs, R&E can correct the distortions created by the crude turnover-only approach. It is not a loophole or a special pleading exercise. It is a valuation method already embedded in the rating system and entirely aligned with how other complex trading assets are assessed.
As April 2026 approaches, the Government must now confront the reality facing the sector. Four steps are essential:
- Acknowledge that turnover-only valuations no longer reflect pub economics.
- Introduce greater transitional protections or targeted sector relief for extreme increases.
- Modernise the valuation approach for pubs to include cost pressures and operational realities.
- Ensure the sector retains support until a fairer system is introduced through the Government’s ongoing call for evidence.
The 2026 Revaluation was intended to create greater fairness and accuracy, but it risks accelerating closures and hollowing out communities.
Pubs survived the pandemic through resilience, ingenuity, and extraordinary effort. It would be a national failure if they were now lost to a rating methodology that no longer bears any relationship to the real cost of running them.
Britain’s pubs do not need special treatment, but they need a valuation system rooted in economic reality.
