Hospitality faces £1bn enterprise charges bombshell 

Pubs and restaurants have urged the Chancellor to stop a ‘billion-pound tax bombshell’ that could quadruple their bills.

UK Hospitality said firms face a ‘devastating cliff edge’ in April when business rates relief is set to end.

The group, which represents more than 100,000 venues, is calling for permanent reform to replace the Covid-era aid.

With the relief, all hospitality and leisure businesses have 75 per cent shaved off their business rates bill, with the discount capped at £110,000 per firm.

Tax threat: Business rates relief, which gives hospitality and leisure businesses up to 75% off their rates bills, is due to come to end on March 31

Business rates are a local levy based on the value of a commercial property – meaning shops pay a premium compared to online giants such as Amazon.

During the pandemic, there was 100 per cent relief between 2020 and 2022, then 50 per cent the following year. It was then extended to 2025.

But the relief is set to end on March 31, whacking hospitality firms with an extra £928million bill.

Labour have pledged reforms and said the system ‘disincentivises investment, creates uncertainty and places an undue burden on our high streets’.

In its manifesto, the party promised to ‘replace the business rates system, so we can raise the same revenue but in a fairer way’.

But businesses are worried reforms will take too long and waves of venues could close before then.

High Street firms have called for Rachel Reeves to take urgent action at her first Budget on October 30. They want to see a permanent, lower rate used to calculate how much businesses should pay, meaning lower bills.

Concerns have been exacerbated by Reeves’ warnings that there are ‘difficult decisions’ to come in the Budget.

Business taxes are among those she has not ruled out hiking as she claims she has to plug a £22billion ‘black hole’ in the country’s finances. 

There are also worries over a potential increase to capital gains tax and a raid on pensions.

Business rates are another headache for bosses as they await more details over Housing Secretary Angela Rayner’s plan for workers’ rights. 

Some have cautioned that the package of reforms, such as day one ‘basic’ rights like sick pay, could hit jobs and economic growth. 

A lower, permanent and universal rate, or ‘multiplier’, for hospitality would be a critical first step to deliver that change.

Kate Nicholls, chief executive of UK Hospitality, said: ‘Hospitality businesses are facing a devastating cliff edge next April, when many will see their bills quadruple. The scale of this almost billion-pound tax bombshell is just not viable. 

Many will face risk of closure, be forced to let people go to stay afloat, or shelve their investment plans.’

A typical pub in a market town could see an increase of just over £11,000 to their bill, while standard seaside hotels could face an increase of £40,000, according to UK Hospitality.

A Treasury spokesman said: ‘We are committed to a fairer business rates system.’

Elsewhere on the High Street, retailers including Currys and Marks & Spencer have called for the rates system to be reformed.