UKHospitality pushes for differential rates multipliers

Pubs and bars could be looking at a revolutionary change to business rates taxes, should government plans to overhaul the current structure come to fruition. 

When giving evidence to the Public Bill Committee on the Non-Domestic Rating (Multipliers and Private Schools) Bill, UKHospitality's Kate Nicholls said the plan to introduce differential multipliers would help level the playing field for high street businesses.

Under the proposals, properties with a rateable value below £500,000 could benefit from a multiplier that is 20p in the pound lower than the small business multiplier. UKHospitality has urged the government to implement that maximum discount. 

Nicholls also raised concerns in her evidence that some hospitality businesses with a rateable value over £500,000 have been dragged into the surcharge category and face paying higher business rates, something which goes against the intention of the policy.

This is particularly the case for businesses operating in coastal communities, where they are often the largest employer in the area.

At the evidence session, UKHospitality suggested two solutions to correct this oversight. Excluding hospitality businesses with a rateable value over £500,000 from the higher multiplier surcharge; or a clear ministerial direction that hospitality businesses will have a zero uplift on current levels, as the Bill allows for multiple multipliers above £500,000.

This solution, the trade body says, will ensure the spirit of the reform remains intact, which intends to redress the decades-long overtaxing of hospitality. Annually, the sector has paid 10% of business rates, while contributing 3% of eligible turnover – an overpayment of £2.4bn.

Substantial reform

"We have campaigned for substantial business rates reform for years and I’m delighted that the government is taking decisive action to fix this broken system," says Nicholls. "A permanently lower level of business rates will hugely benefit hospitality businesses and, crucially, rebalance a system that has unfairly overtaxed the high street by billions of pounds.

"After decades of paying significantly more than their fair share, this Bill should provide maximum benefit for hospitality businesses to make up for this overpayment and give them the financial headroom they desperately need in the years ahead.

"However, we do have concerns that the current proposals inadvertently bring hospitality businesses into scope for the surcharge. I’m confident that the government didn’t intend for this reform to increase business rates bills for any hospitality businesses, so they will presumably be keen to address this oversight as this legislation goes through parliament."

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