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UKHospitality CEO Kate Nicholls has raised concerns that some hospitality businesses with a rateable value over £500k have been “dragged” into the surcharge category and face paying higher business rates, which goes against the policy’s intention.
Under the proposals, properties with a rateable value below £500k could benefit from a multiplier that is 20p in the pound lower than the small business multiplier, which UKH has urged the government to implement at maximum discount.
According to the trade body’s evidence to the Public Bill Committee on the non-domestic rating, the introduction of differential multipliers would help “level the playing field” for high street businesses.
Nicholls emphasised that this issue is pressing for businesses operating in coastal communities, where they are often the largest employer in the area.
As a result, UKH has suggested two solutions: either the exclusion of hospitality business with a rateable value over £500k 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 £500k.
UKH believes this solution 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 – spelling an overpayment of £2.4bn.
Nicholls said: “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. 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.”
She added: “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.”
