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Scottish hospitality businesses face a potential £69m increase in business rates in 2026/27 unless the Scottish government intervenes, according to new analysis from UKHospitality.
The trade body said draft figures from the Scottish Assessors Association show average rateable values for hospitality properties rising by 23%, a change that would significantly increase bills across the sector. The impact would be compounded if the existing 40% relief for hospitality properties with a rateable value below £51k is not extended.
According to UKH Scotland, the combined effect of higher valuations and the potential loss of relief would leave many businesses facing unaffordable increases, accelerating closures and job losses across the industry.
In response to the draft valuations, the organisation has written to first minister John Swinney, calling on the Scottish government to pause the revaluation process and work with the sector on alternative measures, including freezing rateable values at current levels.
The letter includes case studies from members highlighting the scale of the increases. A small rural pub saw its draft rateable value rise from £9,474 to £24,700, an increase of 160%, which would remove it from the Small Business Bonus Scheme. The business has already laid off staff this year.
Meanwhile, a rural hotel in west Scotland recorded a 40% increase in its rateable value, following a similar rise in 2023, pushing it into a higher property rate. A restaurant in Edinburgh city centre received a 54% increase and closed last week with immediate effect.
UKH Scotland is also calling for a permanently reduced business rates poundage for hospitality and leisure of 30p in the pound, funded by what it described as a rebalancing of the tax burden to reflect the growth of the online economy.
Leon Thompson, executive director of UKH Scotland, said: “This 23% average increase to rateable values will push up hospitality’s business rates bill by as much as £69m. That’s simply not sustainable.
“There are businesses that have received their draft valuations and are seeing increases of 160% and higher. Without action, we will only see business closures accelerate, more jobs lost and Scottish communities continue to see the loss of much-loved local venues.”
He added: “With these valuations only being drafted, the first minister and the cabinet secretary for finance can step in and make clear that they will not allow hard-pressed Scottish hospitality businesses to be hit with this level of unjust rate hike.”
