Pubs in scenic locations are set to be charged higher business rates in what is being called the “nice pub tax”. HMRC has handed out new guidance to tax officials to charge higher tax on “character properties” in more “attractive” locations, such as by a river or surrounded by scenic green space. It marks a significant change in how nearly 40,000 pubs will be assessed during this year’s revaluation exercise.

Business rates are based on a property’s ‘rateable value’, which is updated by the Valuation Office (VO) to reflect changes in the property market. According to new reports, pubs that have playgrounds and large car parks face higher rates, as do gastropubs that serve a premium-priced menu. The Conservative Party have said this will lead to “last orders for countless beloved watering holes”. Landlords have called for reforms in the way business rates are calculated, as industry leaders warn that many boozers will not be able to absorb these costs and will be forced to shut.

Meanwhile, pubs offering breakfast service, daytime coffee, or late-night trading are also at risk of higher assessments and bigger tax bills. Pubs pay a percentage of what is deemed to be their rateable value, which is essentially their worth as a business.

Shadow Communities Secretary Sir James Cleverly has harshly criticised Labour’s approach. “Labour’s business rates raid is heaping misery onto struggling pubs across England,” he said.

“Having promised to get bills down, Rachel Reeves has instead sent them soaring.”

It comes as the Conservatives pledged to completely eliminate business rates for a significant number of pubs. Pubs are expected to be hit with much higher tax bills as the last valuation was carried out during the Covid-19 pandemic, and reflected the exceptional circumstances of the time.

Allen Simpson, the chief executive of UKHospitality, said: “We have long called for complete reform of the broken business rates system, which has seen hospitality pay far more than its fair share for decades.”

“While an ongoing review of valuation methodology for pubs and hotels is positive, we still need the Government to deliver its commitment to lower rates bills for the entire hospitality sector.

“That is one of the critical ways to reduce hospitality’s cost burden, which is the highest in the economy.”

Meanwhile, a government spokesperson said they are “backing Britain’s pubs”. He added that the government is “cutting this year’s business rates bills by 15 per cent followed by a two-year freeze, extending World Cup opening hours and increasing the Hospitality Support Fund to £10million to help venues grow.”

“HMRC’s expert surveyors use standard industry methods which have been used to value pubs for decades.”