
By Shaylesh Patel, Founder and CEO of ASTOP
As the UK Government and local councils face growing financial pressure, higher business rates—particularly on sectors like hospitality—are increasingly being discussed. However, raising rates risks further burdening businesses while much of the Government’s £4.3bn business rates support is concentrated among large organisations, while pubs receive relatively modest relief that offers little meaningful support. All this ignores a significant source of untapped revenue: closing loopholes that allow some landlords and developers to reduce their liabilities through technical and administrative mechanisms that are widely regarded within the sector as exploitative – and cost local councils around £300m annually. Rectifying this does not need to wait for the long-awaited reform of the complexities of the UK’s business rates system.
Hospitality operators are already facing rising energy costs, labour shortages, higher food and drink prices, and shifting consumer behaviour driven by the cost-of-living crisis. Yet for many smaller businesses, rates bills continue to rise, even when headline reforms such as reductions to the rates multiplier are announced. In practice, hospitality and retail remain among the worst affected
Recent coverage of business rates relief has exposed a growing sense of unfairness at the heart of the system. Under the current transitional arrangements, major airports are set to receive extraordinary levels of support, with Heathrow alone expected to benefit by around £900 million over the next three years.
Also, large venues stand to benefit too. For the 02 Arena, for example, pub relief is worth close to £1.3m. If it was subject to the cash cap rules for retail, leisure and hospitality relief it would only by £110,000, which would leave £1.2m to support a host of other venues and businesses. By contrast, support for pubs totals around £80 million, leaving the average pub with an annual saving of roughly £1,650, a figure that will barely register for operators facing rising costs and falling footfall.
While pubs have received some targeted attention, much of the wider hospitality sector continues to be overlooked. Hotels, restaurants, cafés, and caterers often fall outside sector specific relief, despite facing similar pressures. This disparity matters. Hospitality businesses play a vital role in their communities yet continue to shoulder a heavy and unpredictable tax burden. Directing vast sums towards large infrastructure operators while local businesses receive marginal relief risks undermining confidence in the fairness of the system.
Situation Compounded by Rates Avoidance
Making things worse is the fact that the system for business rates is riddled with extensive and well-known dodges that allow liabilities to be avoided altogether. Properties are, in some reported cases, registered as storage facilities through minimal use, or temporarily classified as agricultural land through activities that industry observers have questioned as economically unviable, including small-scale or symbolic uses in urban commercial premises. Landlords also exploit empty-property relief by cycling tenants in and out, keeping units deliberately vacant just long enough to reset exemption periods.
Others subdivide buildings into artificial micro-units, shift liability onto shell companies that are then dissolved, or make minimal, cosmetic changes to argue that premises are not rateable at all. These practices are frequently cited in industry reporting and professional commentary as recurring features of the current system, raising concerns about fairness and the long-term integrity of the business rates tax base.
ASTOP has engaged with a range of third-sector organisations, commercial landlords, and local authorities in discussions around empty property use and business rates compliance, and we established a campaign group Ban Box Shifting to tackle this. ASTOP works with major organisations such as RSPCA, Age UK, commercial landlords such as Savills, British Land, and Land Securities, and multiple local councils such as Woking, Watford, and Southend. At ASTOP we have seen first-hand how loopholes distort the system, allowing some businesses to sidestep their fair contribution while compliant operators shoulder the burden.
Comprehensive Business Rates Reform is Needed
Reforming business rates offers a more sustainable solution for businesses, particularly in the hospitality sector, than continuing with piecemeal reliefs. The long tail of Covid-19 and shifts in consumer behaviour have deeply affected hospitality, particularly pubs, which continue to adapt to lasting changes in how people socialise and spend. While sector specific bailouts are often proposed as a solution, they risk deepening inequalities and encouraging further lobbying rather than addressing structural flaws. Smaller operators and niche businesses are frequently left behind, reinforcing a cycle of short-term fixes rather than meaningful reform.
Closing loopholes such as box shifting, artificial agricultural use, and abuse of empty property relief would get landlords and developers to make deals faster; generate additional revenue for councils that could be reinvested to support businesses and ensure local councils don’t suffer.
Industry estimates suggest that closing these loopholes could raise in the region of £300 million annually. It would then be able to offer the support that the hospitality industry needs, without business rates or taxes.
ASTOP has put forward clear proposals to close these loopholes, including reforms targeted at storage misuse and snail farming exemptions. Many stakeholders will be watching closely to see whether the Government consultation results in practical changes, rather than further delays to long-discussed reforms.
Creating a Fairer System
The aim of business rates reform should be to establish a system that treats all businesses equitably, with liabilities based on a realistic assessment of their ability to pay rather than exploitative thresholds and technical exemptions. Reducing the overall burden on compliant businesses would allow operators to reinvest in staff, innovation, and growth, delivering wider economic and social benefits
By closing loopholes and curbing unethical mitigation practices, the Government can create a more balanced and credible business rates system that supports councils while restoring confidence among businesses that play by the rules.
Reforming business rates would not only provide immediate relief but also lay the foundations for a more resilient and sustainable future. With decisive action, the Government can unlock lost revenue, support local authorities, and help businesses to thrive as engines of economic growth and social value.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of Global Banking & Finance Review or GBAF Media Publications LLC FZ. The author is Founder and CEO of ASTOP, an organisation involved in business rates mitigation and related policy discussions. References to organisations, practices, or figures are based on publicly available information and industry commentary and are provided for opinion and analysis purposes only.


