HMRC said its published guidance on 2026 valuations for pubs “doesn’t introduce any new policy”, adding that surveyors use “standard industry methods” that have been used to value pubs “for decades under multiple administrations”.
The clarification follows reports that pubs in attractive locations, or those with outdoor trading space, strong food offers, car parks, playgrounds or community facilities, could face higher business rates bills under valuation guidance.
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However, HMRC said the latest guidance was used to calculate values that came into effect on 1 April 2026. The next revaluation is not due to take effect until 2029.
A Government spokesperson told The Morning Advertiser (MA): “HMRC’s published guidance on 2026 valuations for pubs doesn’t introduce any new policy. Its impartial and expert surveyors use standard industry methods which have been used to value pubs for decades under multiple administrations.
“This Government is listening to industry concerns and is reviewing the current methodology on valuing pubs and hotels to implement changes ahead of the 2029 revaluation.”
What does it mean?
Business rates are based on a property’s rateable value, which is set by the Valuation Office Agency. Local authorities then use that rateable value, alongside the Government set multiplier and any reliefs, to calculate and manage the final bill.
For pubs, rateable values are commonly assessed using Fair Maintainable Trade, an estimate of the turnover a reasonably efficient operator could achieve at the property.
HMRC said the way pubs are valued has not changed. It said factors such as attractive locations, views, playgrounds, outdoor trading space and food offers only increase a pub’s rateable value where they enhance its trading potential and justify a higher position within the valuation range.
In practice, this means those features are not taxed separately, but may form part of the wider assessment of a pub property’s rental value and trading potential.
The Government said pubs are being supported through a one-year 15% relief for all pubs and live music venues in 2026 to 2027, alongside existing support announced at the Autumn Budget.
It said around three quarters of pubs will see their bills either fall or remain the same in 2026 to 2027, with bills then frozen in real terms for the following two years.
Wider concern remains
The row has also highlighted wider operator concerns over the current valuation system.
St Austell Brewery chief executive Kevin Georgel told The MA it was “widely understood and acknowledged” that pubs had paid more than their fair share of business rates for decades.
He said: “The review of the outdated valuation methodology provides the opportunity to address this failure in the system and reduce business rates across the entire sector.
“Beyond this, we remain deeply concerned that the valuation approach actively disincentives investment at the very point when the UK economy is in desperate need of conditions and incentives that stimulate investment and growth.
“In this context, it strikes me as completely perverse that well-invested and successful pubs will continue to be penalised through the rates system.”
Georgel called for a “completely new business rates system” that reflects the challenges of operating in regions such as the South West, supports long-term investment and recognises the role pubs play in local economies and communities.
Marc Bridgen, owner of The Dog at Wingham, number 11 on the Estrella Damm Top 50 Gastropubs list, said higher rates would add pressure to already stretched businesses, but argued VAT reform should also be a priority.
He said: “Higher business rates would be just another nail in the coffin for pubs.”
Bridgen added that he would rather see VAT reduced to 10%.
London operator Heath Ball said the wider business rates system remained unfair for pubs.
“The whole business rates system is totally unfair as it is,” he said. “Pubs have always been punished. Restaurants are valued on square footage and we are done on turnover.”
Ball called for a “fully transparent system” and said the turnover-based approach was “dated and crippling”.
Methodology review
The Government has already announced a review into how pubs and hotels are valued for business rates, with changes expected to be implemented ahead of the 2029 revaluation.
The review was confirmed earlier this year after sector concern over the pub valuation methodology used for the latest rating list.
Operators who believe their rateable value is incorrect, or that factual assumptions about their property are wrong, can challenge their valuation through the VOA’s online service.
