By: Yvonne Chappell
23 Jul 2026 6 min read
On 23 July 2026, the Prime Minister confirmed a 20% cut to business rates bills for pubs, social clubs and live music venues in England, taking effect from the 2027/28 rates year, from April 2027. Downing Street says the change will benefit nearly 32,000 venues, save a typical pub around £1,100 in its first year, and cost the Exchequer roughly £100 million a year.
This builds on the 15% relief the government announced in January 2026 for the current 2026/27 year; it has already frozen bills for qualifying pubs and live music venues in real terms for 2027/28 and 2028/29. The new 20% discount sits on top of that freeze. The government won't extend the new discount to the very largest live music venues, though it hasn't yet said exactly where that line falls. Detail is promised at the Budget.
The government says it will fund the package partly by reviewing reliefs currently available to businesses that “do not make a positive contribution to local communities”, with vape shops given as the example, and by tightening VAT compliance for sellers on online marketplaces.
The change applies to England only. Business rates are devolved, so Scotland and Wales would each need to decide separately whether to match it.
It's not hard to see why government reached for these categories. Grant Thornton's own research finds that 24% of adults name live music and gigs among their most valued experiences. It’s worth noting, though, that some of the venues hosting the gigs people value most, the very largest live music venues, are excluded from today's discount.
Two in three people (67%) also say they're more likely to attend something local and not too busy, which echoes the “backbone of local high streets” language ministers used to justify the cut. And with 40% of people surveyed by Grant Thornton telling us they're increasingly prioritising spending on experiences over things, pubs, social clubs and live venues sit in a part of consumer spending that's genuinely growing. The policy doesn't extend that same logic all the way, though. Today's cut is confirmed for these three categories only. Hotels, restaurants, cafes and cinemas are excluded, and the government hasn't yet said how it will treat “hybrid premises”, a cafe-bar serving coffee by day and drinks by night, for example.
There's a property angle worth adding too. If lower bills make it easier for tenants to keep up with rent, that's good news for landlords and high-street investors as well as the operators themselves. A steadier tenant supports the value of the units they're sitting in, not just the footfall passing by.
According to BBC analysis, pubs have now had two rounds of relief: 15% in April and a further 20% today, while hotels and restaurants have had none, even as pubs face rate rises of around 76% over three years and hotels around 110%. Hotels and restaurants alone account for around 2.7 million of hospitality's 3.5 million workforce.
Politically, the reaction was pointed. Conservative leader Kemi Badenoch argued the government's ambitions were “too small,” saying she found herself asking “is that it?”. It was almost word for word the line the Conservatives used against January's 15% relief, when it was the shadow chancellor asking the question rather than the party leader.
A 20% cut is real money, and it will matter to the venues that qualify. But it treats hospitality as a set of separate categories taking turns, rather than a sector facing the same wage, energy and rent pressures right across the board, often with blurred lines between the various offerings as business models evolve to avoid overexposure to any one consumer group.
There's also a bigger question sitting behind all of this: the cost of employing people. Employer National Insurance rose from 13.8% to 15% in April 2025, and the National Living Wage rose again to £12.71 an hour this April. The OBR's own modelling expects most of that added cost to land on wages and prices rather than profits. That share rises to around three-quarters of the total, mostly through lower wages, by 2026/27. This exposes both hospitality and broader consumer-facing businesses, with limited room to raise prices further given the current economic climate.
Two things stand out. First, the timing: this discount isn't in effect until April 2027. That's a long runway for businesses managing cost pressures now, even if the existing freeze limits the downside in the meantime.
Second, the funding. Reviewing reliefs for “anti-social” businesses and cracking down on marketplace VAT non-compliance both make sense in principle, but the government hasn’t legislated either yet. The marketplace measure is still out for consultation. I'd treat today's numbers as a direction of travel rather than a locked-in commitment until the Budget confirms the detail, particularly on which venues qualify.
It's also a different funding mechanism to the one the Prime Minister flagged in his original pledge on 29 June 2026, which pointed to rebalancing more of the rates burden onto warehouses and out-of-town developments. It may still come at the Budget, but it's a reminder that the latest package and the wider reform Burnham originally promised aren't necessarily the same thing yet.
This week's three cost-of-living moves add up to roughly £1.4 billion combined, against about £8.3 billion for a single 1p cut to the basic rate of income tax. Treasury minister Emma Reynolds has said none of it needs new taxes, describing it as reprioritising budgets rather than raising money, a claim that will be easier to judge once the Budget sets out the fuller picture.
The Prime Minister has been explicit that he intends to stick to the fiscal rules he inherited, telling his first Cabinet meeting that “our commitment to the fiscal rules is real”. If the funding measures announced alongside these cuts raise less than expected, the balancing figure is more likely to come from tax rises than from further borrowing. Businesses weighing up today's benefit should keep half an eye on what else might be coming to pay for it.
The government says this is a first step, with wider business rates reform, including Small Business Rates Relief, promised at the Budget. Restaurants, hotels and the wider leisure sector have a genuine opening to make their case before that detail is set.
Our travel, tourism and leisure team works with hospitality and leisure businesses across the UK and internationally to understand the complexities of the corporation tax, employment tax and VAT rules, whilst making the most of incentives and reliefs available. If you'd like to talk through how tax is affecting your business, get in touch.
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