The Treasury is reviewing how pubs are valued. The method matters more than the multiplier.

City A.M. reports that the Treasury has launched an independent review into how business rates valuations are calculated for pubs and hotels in England and Wales. It will be led by Jerry Schurder, an independent business rates specialist, and it reports back to the Treasury by the end of March 2027 — in time to inform valuations before the next revaluation in 2029.

James Murray, Financial Secretary to the Treasury, framed it in the usual terms: pubs and hotels are vital for communities and for bringing growth to every postcode. The trade bodies welcomed it warmly. Emma McClarkin, chief executive of the British Beer and Pub Association, called the review sorely needed and hugely welcome. Allen Simpson, chief executive of UKHospitality, said business rates remain a significant burden and the system needs to better reflect the trading realities of the sector.

All of which is what you would expect. But strip out the announcement language and there is a genuinely interesting question underneath, and it applies well beyond pubs.

The bill is a method, not a rate

Almost every conversation about business rates is about the multiplier — the pence-in-the-pound figure applied to your rateable value. That is understandable, because it is the number that appears in the Budget and it is the one campaigners can push on.

But your bill has two ingredients, and the multiplier is the boring one. In England for 2026 to 2027 the retail, hospitality and leisure multipliers are 43p where the rateable value is £51,000 or more, and 38.2p below that. The standard multipliers are 48p and 43.2p, with 50.8p on properties at £500,000 or more. You multiply your rateable value by the relevant figure and that is your bill before any relief.

The multiplier is public, uniform and applies to everybody in the same band. The rateable value is where the actual variation lives — and how yours gets arrived at depends entirely on what kind of property you occupy.

Why pubs are different, and why that matters

Most commercial property is valued by comparison. The Valuation Office looks at what similar premises in similar locations rent for, and sets a rateable value that reflects the open-market rent at the valuation date. Your shop's rateable value tracks the local rental market. It does not care how well you personally trade.

Pubs are commonly valued a different way, using the receipts and expenditure method, which estimates rental value by reference to what the industry calls fair maintainable trade — essentially, what a reasonably efficient operator could be expected to turn over in those premises.

That produces a consequence people find genuinely surprising the first time they meet it: for a pub, the rateable value is derived from the trade. Not from your trade specifically, but from what the premises are judged capable of doing. So a site that demonstrably supports a bigger business supports a higher assessment.

Value your rates bill off your takings, and a good year eventually shows up as a bigger bill. That is not a conspiracy — it is just what the method does.

Put a figure on it. Take a pub with a rateable value of £60,000. At the 43p retail, hospitality and leisure multiplier that is a bill of £25,800 before relief. Now suppose the premises are judged capable of supporting 10% more trade by the next revaluation, and the rateable value moves to £66,000. The bill becomes £28,380 — an extra £2,580 a year, arriving because the site's trading potential went up.

The shop three doors down does not work like that. If its rent has not moved, its rateable value broadly has not either, however good a year it has had. Same street, same multiplier, completely different relationship between success and the tax bill.

The cliff edge nobody mentions

While we are in the arithmetic, there is a detail worth knowing whatever sector you are in, because it catches people out every revaluation. The lower multiplier applies below a rateable value of £51,000 and the higher one applies at £51,000 and above. It is a threshold, not a taper.

For a hospitality business that means a rateable value of £49,000 produces a bill of £18,718 at 38.2p, while £51,000 produces £21,930 at 43p. Two thousand pounds of extra rateable value, £3,212 of extra bill. If your assessment sits anywhere near that line, it is worth knowing exactly where it falls before you assume a small change is a small change.

The part that will disappoint people

Two things about the timing are worth being straight about, because the announcement language rather glides over them.

The review reports at the end of March 2027 and is aimed at valuations ahead of the 2029 revaluation. And the increases coming out of the 2026 revaluation are not affected by it. So for anyone currently looking at a bill they think is wrong, this review changes nothing about the next two years. It is a fix aimed at the cycle after this one.

Separately, a 20% business rates cut for eligible venues has been announced from April 2027, which is real money and arrives sooner. But that is a change to the rate, not to the method — and the whole point of commissioning a review into valuation methodology is an implicit acknowledgement that the rate is not where the unfairness is alleged to be.

What this means if you are not a pub or a hotel

Three things generalise out of this, and they are worth ten minutes from any business occupying premises.

First, find out what your rateable value actually is and how it was arrived at. It is public information, and the valuation is a professional judgement rather than a fact — which means it can be wrong, and it can be challenged. Most small businesses have never looked.

Second, know which side of £51,000 you are on, and by how much. That single threshold is worth more to a marginal business than most of the reliefs it spends time chasing.

Third, and most usefully: understand that your rates bill is the output of a method somebody chose. Pubs, hotels, petrol stations, cinemas, holiday parks and a long list of other trades are valued on a basis that reflects trading potential rather than rental comparables. If you are in one of those trades, growth and tax are linked in a way your neighbours' are not, and that belongs in your planning rather than arriving as a surprise letter.

While the review runs

There is no action to take on the review itself — it is a seven-month process with no consultation on your desk. But it is a reasonable prompt to do the thing most owners keep meaning to do.

Check your rateable value. Check the threshold. Check whether you are getting every relief you are entitled to, because small business rate relief in particular goes unclaimed by businesses that assume they earn too much to qualify when the test is about the property, not the profit. And if the assessment looks wrong, the challenge process exists and it is free to start.

The coverage of the announcement noted that around two pubs a day are closing across Britain this year. A valuation review reporting in 2027 will not change that arithmetic for the ones closing this autumn. What it might do is make the next cycle fairer for whoever takes the lease on afterwards — which is a slower and less satisfying kind of good news, but real enough.