September inflation puts England’s hospitality sector on course for a £129m business rates rise

Hospitality, leisure, and accommodation businesses in England are on course to face a £129m increase in business rates from April 2027 after September inflation came in higher, according to tax and software consultancy Ryan, adding fresh pressure to pubs, restaurants, hotels, and other venues ahead of the government’s autumn budget.

The Office for National Statistics said the Consumer Prices Index rose 3.5% in September, up from 3.1% in August. That September reading is used to set the annual increase in England’s business rates multipliers, making it a key number for companies with large property costs.

Ryan said the latest inflation figure points to an overall £1.1bn rise in business rates bills across England from next April unless the government steps in when Chancellor John Healey delivers the Autumn Budget on October 28. Within that total, the consultancy estimated that £352m would fall on properties classed as “Other,” a broad category that includes hospitality, leisure, education, health, transport, and utilities.

Of that amount, Ryan said £129m is likely to land on hospitality, leisure, and accommodation properties, including pubs, restaurants, hotels, holiday lets, and leisure attractions. The increase would come after the 2026 business rates revaluation, which Ryan said lifted rateable values in England by 19.4%.

The figures suggest hospitality would be one of the most exposed parts of the economy to the next round of property tax increases. Ryan estimated industrial properties would face a £302m increase, offices £244m, and retail £206m.

Alex Probyn, Ryan’s practice leader of property tax for Europe and Asia-Pacific, said the September inflation figure had set the basis for a large increase in next year’s bills unless the Treasury changes course. He said annual inflation uprating adds to recurring property costs and leaves businesses with less capital to open sites, expand facilities, or refurbish premises.

That pressure is likely to be felt sharply in hospitality because many operators are still managing a long list of rising costs at the same time, including labor, food, energy, and financing. A higher business rates bill would add another fixed expense that businesses cannot easily reduce, especially for companies with multiple sites or larger venues in high-value locations.

For pubs, bars, restaurants, and hotels, the effect could extend beyond property costs. If operators have to divert more cash to tax bills, that could reduce room for investment in menus, venue upgrades, staffing, and drinks ranges. It may also weigh on purchasing volumes and demand for beer, wine, and spirits if businesses trim stock or customers pull back in response to higher prices. Those outcomes are not certain, but the tax increase could add to the financial strain already facing the drinks trade through its hospitality customers.

The government has already announced one measure aimed at easing some of the burden. From April 2027, pubs, social clubs, and live music venues are due to receive a 20% business rates cut. That relief may soften the impact for parts of the sector, but it does not remove the wider increase Ryan is projecting across hospitality and leisure properties.

Ministers are also reported to be considering a broader change to small business support by raising the Small Business Rates Relief threshold from £12,000 to £18,000. If adopted, that would form part of a wider package of business rates reform expected to be set out at the budget. Such a move could help smaller operators, although its practical effect would depend on how the rest of the system is changed and which businesses qualify.

Probyn said the main test of any budget package would be whether it improves the conditions for investment and growth across the whole business rates system rather than shifting the burden from one group of taxpayers to another. That point matters for hospitality because relief targeted at a narrow group of venues may leave other parts of the industry, including hotels, larger restaurant groups, and some leisure operators, still facing higher bills.

The issue is specific to England because business rates are devolved in Scotland, Wales, and Northern Ireland, where separate systems apply. Even so, the English changes matter across the broader hospitality and drinks market because England contains a large share of the country’s pubs, restaurants, hotels, and nightlife businesses.

With a week to go before the budget, the projected increase has added to calls for ministers to use the tax statement to limit the effect of inflation on property bills. For hospitality businesses, the outcome will shape costs from April 2027 at a time when many operators are trying to protect margins, maintain investment, and hold down prices for customers.