Amongst the many rising costs impacting the hospitality industry, business rates are of particular concern. Autumn 2025 saw the Chancellor of the Exchequer announce an increase that experts say could have a hugely detrimental effect.

How are business rates changing?

According to Rachel Reeves, the government plans to increase rates on large, online retailers such as Amazon to fund lower rates for around 750,000 smaller businesses, some in the hospitality industry and others in leisure and retail; hover, analysis by UKHospitality suggests there will actually be a 13% increase in 2026/27, followed by 38% in 2027/28 and 58% in 2029. In numbers, this is £38.7m, £110.6m, and £168.5m more by year.

Broken down into specific businesses, this could mean a 76% rise for pubs and 115% for hotels, compared to 16% for distribution warehouses and 4% for supermarkets across the same three-year period.

Likely outcomes

If businesses face higher costs as a result of the rate rises, they may have to increase prices or reduce staffing to compensate. Some may even have to close, and investments such as new commercial kitchen installation may have to be delayed.

UKHospitality is campaigning to postpone new business rate evaluations so they remain at 2023 levels, and for the hospitality industry to receive a 20p discount on business rates, which is consistent with existing legislation.

The rise in business rates is clearly going to present a challenge for the hospitality industry, including any plans for commercial kitchen installation; however, there is still hope that the campaign for relief will be successful.