New Prime Minister Andy Burnham has announced that pubs, clubs and live music venues will receive a 20% cut to their business rates bills, the tax on non-domestic properties, in 2027-28.
Under the tag "Burnham means business" a government release said the measures would save the typical pub an estimated £1,100 next year.
It said the measures aim to support the "backbone of local high streets". While there was no specific detail of how this would be funded the announcement said it will be fully paid for by reviewing reliefs provided to "anti-social businesses, such as vape shops".
There was also immediate comfort for the industrial sector which had been expecting the Prime Minister to promise to fund the package by increasing business rates for warehouses, particularly those occupied by large retailers like Amazon.
Edwin Morgan, director of policy at the UK Warehousing Association, said in a statement: "The Prime Minister has said in recent weeks that he would raise business rates on warehouses in order to pay for a cut for hospitality venues. We very much hope that today's announcement is a sign that he has listened to our sector and will not seek to load the burden on warehouses, who have already seen substantial increases this year.
"Our members store and distribute the food, drink and other goods that are essential to pubs and music venues the Prime Minister is trying to support. You can't have a vibrant town centre without a successful logistics sector supplying everything it needs to function."
The government today said the reform is part of a series of measures to cut costs for working people and communities, including the previously announced electricity bill VAT relief and £2 bus fare cap.
The announcement said the business rate cuts will benefit nearly 32,000 pubs, clubs and live music venues.
The government will also crack down on businesses that "sell through online marketplaces but do not comply with their tax obligations, putting them at an unfair advantage over businesses that play by the rules".
The government said it is consulting on measures to make online marketplaces more responsible for preventing non-compliant sellers from avoiding their tax obligations with further detail coming "in due course". "Revenue raised from these reforms will be reinvested in improvements to the business rates system," it added.
The consultation on extending VAT online marketplace liability to combat non-compliance can be found here.
Prime Minister Andy Burnham said in a statement: "For too long, governments have stood by while cherished venues have disappeared from our local high streets. So today I am changing that. This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do. What we’re announcing today is just the start as we work to bring back hope across the country."
Chancellor of the Exchequer John Healey said the government would return to its commitment to reform the wider business rates system, including Small Business Rates Relief, at the Budget in the autumn.
Government said the package of support is worth around £100 million a year.
The government has begun working on reforms to the business rates system in this Parliament. At Budget 2025, Rachel Reeves announced a permanent 5p cut in the business rates multipliers for over 750,000 retail, hospitality and leisure properties, funded by a higher multiplier for the most expensive 1% of properties.
At the same time, the government announced £4.3 billion of support to help keep bills down for those seeing increases in their rateable values at the revaluation. This meant capping bill increases at 15% for most businesses from April earlier this year, or £800 for the smallest, as pandemic-era reliefs came to an end and new revaluations took effect.
For pubs and live music venues, a 15% relief off their 2026-27 bill was announced in January, with bills frozen in real terms for a further two years. The additional 20% cut for pubs, clubs and live music venues from 2027-28 comes on top of this existing support.
The government said it will not be making the new 20% discount available to the very largest live music venues and added that details will be set out at the Budget.
Tax experts at Ryan said the new 20% discount is more generous than it first appears with the significance of the lying in the cumulative impact of the measures.
Alex Probyn, practice leader for Europe and Asia-Pacific Property Tax at Ryan, said in a statement: "The headline 20% discount only tells part of the story. Taken together with the support already announced earlier this year, this represents a significant package. It's also welcome that the government has stepped away from funding the policy through higher business rates on warehouses.
"Most distribution warehouses support manufacturers, supermarkets and wider UK supply chains rather than online-only retail, and have already seen substantial increases in business rates over the last two revaluation cycles. Avoiding further tax increases on a sector operating on tight margins reduces the risk of higher costs ultimately feeding through to consumers."
Business rates are charged on most non-domestic properties such as shops, offices, warehouses and pubs in England and Wales.
The sum is calculated using a "rateable value" or an estimate of the property's open market rental value by the Valuation Office. Local councils takes that value and multiply it with a figure called the "multipler" to produce a final rate.
Dominic Curran, head of communications, Real Estate:UK, said: “Any cut in the onerous burden of business rates is welcome given that the UK imposes the highest tax on property in the OECD. However, what's really needed is a cut for all businesses alongside fixing the tax rate to make bills more predictable, and changes to empty property relief that actually reflect the time taken to relet properties."
Simon Green, co-head of business rates, Newmark, said in a statement: "Earlier briefings suggested the relief would be funded through additional rate charges for distribution warehouses supporting online businesses. The announcement is less specific, stating it will be fully funded 'including through reviewing reliefs for those businesses that do not make a positive contribution to local communities such as vape shops', alongside a consultation on making online marketplaces more responsible for preventing non-compliant sellers from avoiding their tax obligations. It suggests we should expect the long-anticipated consultation on a General Anti Avoidance Rule, originally anticipated before the last election, following the direction of the governments in Scotland and Wales that have already introduced such measures.
"This announcement is welcome news for those running pubs, clubs and live music venues, though asking businesses to wait until the Budget for detail creates uncertainty.
"Businesses have long called for lower business rates for all, yet the most recent changes add to the complexity which is compounded by the delayed response to the Call for Evidence on Business Rates and Investment which closed in February. Businesses need certainty to budget and make investment decisions, which is why calls for more fundamental reform continue."
John Webber, head of business rates at Colliers, said the measure is more about "creating vibes than dealing with the punitive business rates bills faced by businesses up and down the country".
"Extending the business rates discount for pubs, clubs and live music venues from 15% to 20% next year will help a little, but it does not address the real problem which is the valuation method used. The elephant in the room that the new Prime Minister and Chancellor need to acknowledge is that the business rates burden is too high for British business as a whole. The Government has increased the business rates take by 10.2 per cent rise this year, trying to squeeze out so much money from businesses that it leaves very little room for them to invest and grow. Hotels are trying to manage a 77% increase. The fact remains that the business rates burden is increasing this year and next, at precisely the moment when businesses are being made to grapple with higher wage costs and NI contributions.”