Business rates for pubs: how your rateable value is worked out

How are pubs valued for business rates?

Pubs are usually valued on fair maintainable trade (FMT): the annual takings, excluding VAT, that a reasonably efficient operator could expect to make at the pub on 1 April 2024. The VOA then applies percentages to that trade to get the rateable value.

Shops and offices are valued by comparing rents per square metre. Pubs are different: two pubs of the same size can trade very differently, so the VOA works from trade, on the basis that a tenant bidding for a pub would base the rent on what it can take over the bar. The result is still meant to be an annual rent at 1 April 2024.

The four parts of fair maintainable trade

• Drinks (often called "wet" trade): beer, wine, spirits and soft drinks sold over the bar.
• Food: meals and snacks. Food takings below £45,000 a year are treated as too small to value separately.
• Accommodation: letting rooms or lodges.
• Other receipts: gaming machines, pool tables, room hire, admission charges and similar.

Each stream gets its own percentage, because drinks, food and rooms carry different costs and profits.

The reasonably efficient operator (REO)

FMT is not simply your turnover. It is what a reasonably efficient operator could achieve. Your accounts are strong evidence, but the VOA also looks at the pub's design, location and services (food, gaming, sports screenings). Poor management doesn't lower the figure, and exceptional personal skill may not raise it (see over-trading below).

How do the area and category affect a pub's rateable value?

The percentage taken from drinks trade depends on where the pub is (central London, outer London, or the rest of England and Wales) and its category: 1 for city and town-centre pubs, 2 for destination pubs and 3 for community or local pubs. Where the pub sits within the range depends on its costs.

The VOA's guide sets ranges of percentages for drinks trade. Two things decide the range:

• Geographic area: central London, outer London, or provincial England and Wales.
• Category: category 1 covers city and town-centre houses; category 2 covers destination houses, the kind of pub people travel to on purpose; category 3 covers community or local houses that mainly serve their neighbourhood.

Within a range, a pub that is costly to run should sit lower: for example listed or thatched buildings, higher repair liabilities, too much accommodation, or higher energy or staffing costs. Food uses a single band.

Why did pub rateable values go up so much in 2026?

The 2023 values were based on trade at 1 April 2021, when pubs were hit by COVID-19, so most pubs got much lower rateable values than they otherwise would have. The 2026 values use 1 April 2024 and the VOA says the increases reflect the recovery in pub trade since 2021.

So the size of a rise is not, on its own, evidence of an error. What matters is whether the trade, category and percentages used for your pub are reasonable for 1 April 2024. Multipliers and reliefs also changed in April 2026, so your bill will not have moved by the same amount as your rateable value.

The government launched an independent review of how pubs and hotels are valued in August 2026; its call for evidence closed on 16 October 2026 and no outcome had been published when we reviewed this page.

Do I have to answer the VOA's requests for trade or rent details?

The VOA can ask pubs for trading information and rent or lease details, and it has legal powers to require a return. Answering accurately matters, because your figures feed directly into the fair maintainable trade used for your pub.

The VOA asks pub operators for turnover split by drinks, food, accommodation and other income, plus rent and lease details, and can serve a formal notice requiring a return under the Local Government Finance Act 1988. Codes of practice agreed with pub trade bodies say this information is treated as confidential, with limited exceptions such as an appeal about that pub.

• Give figures excluding VAT, split by stream as asked.
• Keep a copy of what you send. If you later challenge, you will need it.
• If the year was unusual (a refurbishment closure, a change of tenant), say so at the time.

How are letting rooms, lodges and other income valued?

If a pub has six or fewer bed spaces, room income is added to the food trade. More than six bed spaces are valued separately, and lodge-style accommodation is valued on the hotel scale. Other receipts such as gaming machines or room hire only count if they are maintainable and profitable.

• Six bed spaces or fewer: the room receipts are added to the food trade and valued with it.
• More than six bed spaces: the rooms are valued as a separate stream with their own percentage.
• Lodges (for example a separate block of rooms in the car park) are valued on the hotel scale rather than as pub rooms.

The rule counts bed spaces, not rooms. If the VOA has counted rooms you no longer let, or the licensee's own living space, raise it through a check.

Other receipts such as machines, pool, room hire and admission should only be valued if the income is maintainable and profitable. Rural sidelines such as a post office counter or village shop often make little profit, and the VOA's guide asks valuers to bear that in mind.

What is over-trading and can it lower my pub's rateable value?

Over-trading is where a pub takes more than a reasonably efficient operator would, because of the current operator's personal skill or brand. That extra trade can be excluded from fair maintainable trade, but only in exceptional cases, and long occupancy on its own does not prove it.

If your takings are well above similar pubs because of something personal to you, such as your own reputation as a chef or a brand you built, the VOA's guide allows that extra trade to be stripped out. In practice it is hard to show: adjustments are exceptional, and having run the pub for many years is not enough. You need evidence that a typical incoming tenant could not keep the trade, such as what happened at comparable pubs when operators changed.

For a challenge, that evidence must go in at the start, because later evidence is only accepted in exceptional circumstances. Knowledge of local comparable pubs matters here.

Are any pubs valued on floor area instead of trade?

Yes, sometimes. Where pubs and restaurants form a distinct rental market, such as modern units in large town centres or retail parks, or for micropubs in converted shops, the VOA may value on floor area instead of trade.

The pub is then measured to net internal area and valued at a price per square metre over the whole floor (shop-style zoning is not used). For micropubs, the VOA compares with other food and drink units rather than ordinary shops. If this applies to you, check the measured area and the price per square metre against similar bars.

What should I check on my pub's valuation?

Check the trade figures the VOA has used, the pub's category, how accommodation has been treated, whether food under £45,000 has been valued, and whether building costs such as a listed or thatched building have been reflected.

Add the pub to your business rates valuation account, look at the valuation details, then check:

1. Trade figures: compare each stream with your accounts around 1 April 2024, excluding VAT.
2. Category: a village local should not usually be treated like a destination dining pub.
3. Food: takings under £45,000 a year should be treated as de minimis.
4. Accommodation: six or fewer bed spaces go in with food, not valued separately.
5. Other receipts: are unprofitable machines or room hire included?
6. Building costs: listed or thatched buildings and high running costs should sit lower in the range.
7. Physical changes: rooms or areas taken out of use can be reported through a check.

What reliefs can pubs get, and what does a typical bill look like?

In England, most pubs pay on the lower retail, hospitality and leisure (RHL) multipliers and get 15% pubs and live music venues relief in 2026/27. Small business rate relief, transitional relief and supporting small business relief may also apply. In Wales, pubs can get 15% Food and Drink Hospitality Rates Relief.

England, 2026/27

• RHL multipliers: 38.2p for rateable values under £51,000; 43p from £51,000 to £499,999; 50.8p for £500,000 or more.
• Pubs and live music venues relief: 15% off, no cash cap. The pub must be occupied, open to the public, allow free entry (except occasional entertainment), allow drinking without food and sell drinks at a bar. Restaurants, nightclubs and hotels are excluded; the council decides borderline cases.
• Small business rate relief: nothing to pay at £12,000 or less, tapering to nothing at £15,000, usually for one property.
• Transitional relief and supporting small business relief: limit rises after the 2026 revaluation and can be combined with pub relief.

Worked example: a pub in England with a rateable value of £40,000

A simplified illustration: transitional or supporting small business relief could reduce it further.

Changes announced for 2027/28

Announced at the Budget on 28 October 2026 and due from 1 April 2027, subject to regulations: pub relief rises to 35% for 2027/28 and 2028/29; qualifying pubs' bills are capped by inflation; RHL multipliers become 39.5p and 44.5p; and small business rate relief for qualifying hospitality properties extends to £18,000, tapering to £21,000. On the same pub, all else equal: £40,000 × 0.395 = £15,800, less 35% (£5,530) = £10,270.

Wales

Pubs in Wales can get Food and Drink Hospitality Rates Relief of 15% in 2026/27, capped at £110,000 per business across Wales. Wales has its own multipliers and small business rates relief (full relief up to £6,000, tapering to nothing at £12,000), and you must tell the council within 60 days when you become the ratepayer.

When might it be worth challenging a pub's rateable value?

A challenge may be worth considering if the VOA has used the wrong trade figures, category or accommodation treatment, has valued unprofitable income, has not reflected your building's costs, or if you have good evidence of over-trading. You can do it yourself for free or use a rating surveyor.

The process is Check, then Challenge, then Appeal to the Valuation Tribunal for England or for Wales. You must raise a check first, then have four months from the check decision to challenge, with your evidence, a statement and the value you think is right. The value can go down, up or stay the same, and you keep paying meanwhile. For a pub the evidence is mainly trade: accounts split by stream, reasons for unusual years, and comparable pubs (the "Find a business rates valuation" service shows summary valuations).

You can do this yourself, free, through your valuation account. Reasons some licensees use a rating surveyor:

• Time: running a pub leaves little room for paperwork.
• Evidence: it must go in with the challenge, first time.
• Comparables: they know how similar pubs have been valued.
• Deadlines: they track the time limits.

No challenge is guaranteed to succeed. Agree any surveyor's fees in writing first.

Related guides

Business rates for pubs: frequently asked questions

Sources

We checked the facts on this page against these official sources on 10 November 2026:

• How pubs are valued for business rates
• Valuation of public houses 2026
• Business rates relief: pubs and live music venues relief
• Estimate your business rates
• Details of the Budget package and the multipliers for 2027/28
• Challenge the valuation

This guide is general information for properties in England and Wales, not advice. Business Rates Hub is an independent guide. We are not your council, the Valuation Office Agency (VOA) or any government service. You can check and challenge your rateable value yourself, free of charge, through the government's business rates valuation account.

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