Treasury Offices to Benefit from Business Rates Reduction as Pubs Face Steep Increases
New analysis has uncovered a striking disparity in the upcoming business rates regime, with HM Treasury's own offices set to receive a significant tax cut while thousands of pubs across the UK face soaring bills. The findings highlight the uneven impact of recent property tax reforms, drawing criticism from industry leaders who warn of potential closures and job losses.
Details of the Treasury's Rates Reduction
According to analysis of official Government figures conducted by tax firm Ryan, the Treasury's office at 1 Horse Guards Road will see its annual business rates bill decrease by £288,180 in the 2026-27 financial year. This reduction comes despite the property's value increasing by 4%. The bill will drop to £9.62 million for the upcoming year, primarily due to a reduction in the multiplier used to calculate rates.
This decrease occurs against a broader backdrop where most large offices across Central London are facing increased tax liabilities from April. The Treasury's position as both policymaker and beneficiary of these changes has raised questions about the fairness and implementation of the new system.
Impact on Hospitality and Retail Sectors
The business rates overhaul includes several key changes that will significantly affect pubs and other hospitality businesses. While the Chancellor announced in November's budget that business rates would be "permanently lower" for small retail, hospitality and leisure businesses, sector bosses have challenged this claim over the past two months.
The Government has confirmed it will end a 40% discount for hospitality, retail and leisure firms from April, replacing it with transition relief measures that will be phased out by April 2029. Additionally, new property valuations for 2026 have resulted in a substantial jump in the average value of hospitality businesses, including hotels and pubs.
According to Valuation Office Agency data, British pubs will see their rates bills rise from next year after their rateable values increased by 32%. This significant increase has prompted warnings from industry bosses and trade groups about potential closures and job losses across the country.
Government Response and Industry Concerns
In response to mounting concerns from the hospitality sector, the Government has indicated plans to provide further financial support for pubs in the coming weeks. However, other sectors, such as hotels, have issued fresh pleas over fears they could miss out on any relief measures.
Tax experts note that other office buildings are also expected to face business rates hikes as part of the overhaul. Alex Probyn, practice leader for Europe and Asia-Pacific property tax at Ryan, provided context: "Across the seven principal Central London office districts, an 11.9% rise in rateable values generates £607.9 million of additional rateable value. Even after lower multipliers and transitional relief, that still results in a £78.7 million increase in business rates liabilities in 2026-27 once supplements are taken into account."
The Treasury has been contacted for comment regarding the apparent disparity between its own reduced rates burden and the increased costs facing pubs and other hospitality businesses. The situation continues to develop as businesses await further details about promised support measures and the full implementation of the new rates system.
