Licensed hospitality businesses across Scotland face an increased risk of closure as a result of the non-domestic rates revaluation due to take effect in April 2026, according to the Scottish Hospitality Group (SHG).With the Scottish Budget due on Tuesday 13 January, the industry body said ministers must decide how the revaluation is implemented and what tax rates and reliefs apply in the 2026/27 financial year, warning that current proposals do not reflect trading conditions.

SHG said many pubs, bars and restaurants are facing sharp increases in rateable values despite what it described as a fragile economic recovery. It said the methodology underpinning the revaluation is outdated and is not scheduled for independent review until later in 2026.

The group pointed to rising wage costs, including higher employers’ National Insurance contributions, alongside increased energy bills and sustained food inflation, as pressures already weighing on the sector. It said the cumulative impact was threatening the viability of many businesses, with higher rates bills potentially tipping operators into closure.

Stephen Montgomery, director of the Scottish Hospitality Group, said decisions taken in the Scottish Budget would be critical for the sector’s future. 

He said: “The business rates revaluation is a hammer blow with some licensed hospitality businesses facing increases of over 550%.”

He added that the valuations were not linked to profitability or ability to pay, and warned that for many operators the figures “simply do not stack up”.

SHG also cited findings from a recent study of a mixed-use Scottish high street, which it said showed licensed hospitality businesses were disproportionately affected by the current system. On that street, the group said, bars and restaurants were the only premises above the £12,000 threshold for the Small Business Bonus Scheme, while neighbouring professional services such as solicitors and accountants remained eligible for relief.

Montgomery said: “On one high street examined, bars and restaurants, often employing far more people and trading longer hours, are the only businesses paying rates. Professional services next door all fall under the small business bonus scheme.”

The group added that it was seeing similar patterns across towns and villages, with licensed hospitality often excluded from reliefs because of how premises are assessed for rates.

In light of this, SHG is calling on the Scottish Government to use the Budget to introduce targeted rates relief for licensed hospitality and to embed affordability and ability to pay as core principles of the non-domestic rates system.

Montgomery concluded that a failure to act would result in closures, job losses and vacant high streets, adding that Scotland should avoid repeating the experience of parts of England following the most recent revaluation south of the border.

Source link