York’s hospitality sector faces a potentially disastrous financial shock due to a huge rise in rateable values next year, business leaders say.
Changes brought in by the government at the last Budget would see business rates for city pubs, cafes and hotels go up by an average of 41%.
That’s the finding of research by the York BID (Business Improvement District).
Some traders will see their rates double. For example, The Terrace Sports Bar & Kitchen on New Street, will see the charge rise from £50,000 to £102,000 – which the owner says could jeopardise its long-term viability.
Shops are looking at an average 13 per cent increase too.
The hikes are due to come in next April, caused by both the removal of business rates relief brought in during Covid, and a wave of reevaluations.
They come on top of other significant cost hikes – the minimum wage and employers’ National Insurance were both also increased by Chancellor Rachel Reeves.
Many business contacted the York BID worried about next year’s business rate rises, prompting its research.
The hospitality sector is expected to be hit hardest, with rateable values rising by a combined £10 million across 331 businesses – a 41% increase compared to the 2023 valuation.
The Labour government said it would change business rates to level the playing field between the high street and online giants. But York BID’s analysis suggests the city’s pubs, cafés, restaurants and hotels would bear a disproportionate burden.
Hospitality is central to York’s economy, accounting for around 34% of businesses within the York BID’s city centre area. The food and drink sector alone employs about 17,000 people and accounts for around 37% of local consumer spending.
The BID’s executive director Andrew Lowson said: “We were contacted by a growing number of city-centre businesses who were extremely worried about what the revaluation could mean for them.
“A 41% increase in rateable value is not a marginal adjustment – it represents a step-change in costs for a sector already under intense pressure.
“Without meaningful intervention or transitional support, these changes risk undermining business viability, jobs, and the vibrancy of the city centre.”
‘A monumental increase’
Paul Gardner owns The Terrace Sports Bar & Kitchen on New Street.
He is dismayed by the business rate raid.“We feel completely let down by the government’s approach to independent pubs,” he said.
“The 2026 revaluation is a disastrous blow – my rateable value is set to more than double.
“This isn’t just a rate rise, it’s a monumental increase that will inflate every cost we face, from our Sky subscription to our licensing fees.
“Why are small, independent businesses being hammered when highly profitable supermarket chains are barely touched?
“This unfair weighting against hospitality jeopardises not only our short-term profitability but our ability to keep the doors open for the long term.”
We have asked the Treasury for a response, and will add it when they get back to us.
