Pubs and restaurants want more relief over business rates

People sitting outside a pub Image copyright Getty Images
Image caption The UK's hospitality industry says some venues are facing steep rises in their business rates bills.

Pubs and restaurants are calling for the chancellor to dilute the impact of business rate rises due in April.

The Association for Licensed Multiple Retailers (ALMR) has written to Philip Hammond asking for more transitional relief for the sector.

Business rates in England and Wales are being updated to take into account changes in property values.

However, the government says a cap on how much bills can rise will cushion the impact for firms facing increases.

The letter written by the ALMR on behalf of its members says that "on average, the pub sector will see a 15% increase and restaurants a 23% increase across the country".

"This will add a further £300m to £500m in additional cost in the hospitality sector," it says.

The ALMR says the impact of the extra costs could threaten the positive contribution the sector is making to overall economic growth in the UK.

The ALMR represents leading brands, including Pizza Express, Wagamama and Yo Sushi, as well as smaller businesses operating from only one or two premises.

"We would urge you to consider reviewing the transitional relief provisions and the introduction of sector specific hospitality retail relief," the letter says.

How are business rates calculated?

Rates are calculated by multiplying the rateable value of a property by a multiplier set by the government. But as property values change over time, rateable values need to be reassessed periodically - usually every five years.

However this update to property values is two years behind schedule, making it a harder pill to swallow in areas where the price of real estate has been rising.

A statement from the Department for Communities and Local Government (DCLG) said that most businesses will not face sharp rises in costs.

"Following the revaluation, three-quarters of properties will see no change or even a fall in their bills, and the small minority of businesses that face an increase will benefit from our £3.6bn transitional relief scheme," it said.

Image copyright Getty Images
Image caption Restaurants in property hotspots face steep increases in rates

However, property experts have predicted that some businesses, especially in thriving commercial centres and the south-east of England could see very dramatic changes to their rates bills, by as much as several hundred percent.

Many pubs and restaurants occupy prime real estate in town and city centres.

The DCLG added that many pubs had seen turnover increase significantly since the last rates valuation in 2010 as a result of the growth in casual dining. That increase in revenue would affect the rateable value of the property, it said.

However the government's planned cap on annual increases means that bills will rise gradually over five years rather than all in one go, with greater protection provided for smaller businesses.

The DCLG said that while some businesses will see their rates bill rise, others will see bills remain the same or even fall.

Overall the rates upgrade is designed to be revenue neutral.

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