Following news the Government is expected to make a U-turn on hikes to business rates, and the Prime Minister’s acknowledgment of the struggles faced by pubs under the 2026 revaluations, global tax firm Ryan has outlined the four “essential steps” ministers must take to support the sector.
It called for the Government to acknowledge turnover-only valuations no longer reflect pub economics, introduce greater transitional protections or targeted sector relief for extreme increases, modernise the valuations approach for pubs to include cost pressures and ensure the sector retains full support until a fairer system is introduced.
Ryan practice leader for Europe & Asia-Pacific property tax, Alex Probyn, said: “The Government must now confront the reality facing the sector. Britain’s pubs do not need special treatment, but they need a valuation system rooted in economic reality.”
Rising costs
Analysis of the draft 2026 rating list by Ryan showed rateable values for 19,813 pubs surveyed in 155 council areas were set to rise by more than 30% compared to the sector average, with some facing uplifts of more than 70% on average.
The global tax firm warned this risked rendering otherwise viable pubs unsustainable, describing the way valuations are determined as the “heart of the issue”.
It added the removal of rates relief from 1 April 2026, increases to alcohol duty and rising operational costs had piled on the pressure.
“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 also rose by 10.1% in 2023.
“Take together, 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”, Ryan stated.
Flawed system
In addition, Ryan said valuing 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, would address the issues with the current “flawed system”.
The global tax firm added: “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.
“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.”
