The Scottish Government has announced that business rates relief for licensed hospitality premises will rise to 40% for the next three years – a move welcomed by much of the sector, though larger venues remain excluded.
Unveiling the decision during the Stage 1 budget debate, the government confirmed that the enhanced relief, agreed as part of a budget deal with the Liberal Democrats, will apply to premises on the basic and intermediate property rates. Eligible businesses will see relief rise from 15% to 40%, subject to a cap of £110,000 per business.
Leon Thompson, Executive Director of UKHospitality Scotland, described the move as “positive news” that would “help soften the blow for many licensed hospitality businesses.”
“UKHospitality Scotland has been clear that urgent support was needed for the sector, and it’s clear the Scottish Government has acted as a result of our engagement,” he said.
“This is a good example of how the Scottish Parliament can make a positive difference to businesses when political parties work together. However, the sheer scale of rateable value increases has driven rate bill hikes to such an extent that business rates bills will still increase for the vast majority.”
Thompson warned that the current business rates system remains “completely broken” and urged deeper reform, suggesting that fixing it “has to be a priority for the next Scottish Government.”
Paul Togneri of the Scottish Beer and Pub Association echoed that sentiment, noting that the increased support provides “some much‑needed breathing space” for pubs across Scotland, particularly with confirmation that the relief will run for three years.
“However, the retained state aid cap means many pubs will still be unable to fully benefit from today’s announcement,” Togneri said. “Longer‑term, pubs are still being hit by sky‑high energy costs, a punishing VAT burden, and some of the highest beer duty rates in Europe. There must be a permanent solution to the unfair rates burden and not just year‑on‑year reliefs.”
Meanwhile, the Scottish Hospitality Group (SHG) welcomed the limited progress for smaller licensed hospitality businesses but expressed frustration at the ongoing exclusion of larger venues. Stephen Montgomery of SHG again called for all rate increases to be halted while the independent review of the valuation methodology in Scotland is underway.
“Inflation‑busting rate rises will still hammer licensed hospitality in Scotland, especially for larger businesses,” Montgomery said. “Many of these businesses employ dozens, sometimes hundreds, of staff, support local supply chains and generate significant tax revenues – yet they have again been left out of any sort of meaningful relief.”
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The SHG emphasised that the current approach risks penalising venues with high rateable values, many of which are not “large” operators in practice but still face considerable cost burdens. Montgomery added that the group will “ensure the independent review looks squarely at the evidence” of a disproportionate rates burden on larger hospitality premises.
While the relief extension offers a degree of support for many venues, industry leaders stress that fundamental reform of Scotland’s business rates system remains essential to secure the long‑term sustainability of the country’s hospitality sector.
