Current Affairs

Hotels to be ‘hardest hit’ by business rates hike

New figures from UKHospitality, has revealed that accommodation businesses will be among the “hardest hit” by today’s (1 April 2019) annual increase in business rates.

The trade body said the current business rates system sees the hospitality sector, which collectively pays more than £3bn in rates per annum – an overpayment of £2.4bn relative to their economic activity, four times more than they should.

UK Hospitality said that the sector will be hit by an annual rates hike of £27m and miss out on sector business rates reliefs to the tune of £73m.

It added that the rates rise comes at a time when all hospitality businesses are facing increasing costs in the areas of employment, goods and property, along with labour shortage challenges and “Brexit-fuelled investment uncertainty”.

The figures are revealed as part of UKHospitality’s response to the Treasury Committee inquiry into business rates. As part of its submission, UKH has called for action in a number of areas, including:

  • The appointment of a Royal Commission to reform rates in the context of the wider business taxation system, with consideration given to moving away from a property-based tax system
  • The need for reliefs to be more targeted on sectors that currently overpay government reconsideration of the application of state aid rules, which restrict the number of business that can benefit
  • That if state aid rules are applied to reliefs then government should consider differential multipliers for certain sectors.

UKHospitality CEO Kate Nicholls said: “Today may be April Fools’ Day but for thousands of the UK’s world-class businesses in our sector, business rates are no joke. These companies are in urgent need of help from the government; they are increasingly struggling from the effects of a disastrous rates revaluation and an archaic tax system that is shutting down the UK’s growth engine and threatening the millions of jobs they support in communities up and down the country.

Business rates are outdated and urgently require reform. We are calling for a Royal Commission – a major formal public inquiry – such is the importance of this critical issue to the future health and prosperity of the UK’s high streets. The government must act to make the system fit for purpose in the 21st Century.”

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