Hotel owner says rate hike could 'sink' businesses

The director of a luxury hotel has warned a steep rise in business rates will put pressure on his business and could force others in the hospitality sector to close.

Jason McKelvie said Stirrups Hotel could see its annual rates rise by almost £150,000 over the next three years, following the changes announced in October's Budget.

The independent hotel in Maiden's Green, Bracknell, Berkshire, is appealing the rise but McKelvie expects the process to take about six months due to a backlog in the system.

The Treasury said it was "backing the high street by reforming business rates" with a £4.3bn support package and was capping bills for businesses that's rates have risen.

McKelvie said: "It's a huge jump for us. We employ 29 full time, six part time and then plenty of casual workers – students – hospitality is a huge employer in the UK but our industry has seemed to be unduly targeted on taxes at the moment."

Stirrups is a small independent hotel, that has been family-run for 36 years. McKelvie explained it doesn't have the resources larger chain hotels have and that smaller players that will be hit hardest.

He added the rate increases "will sink a lot of people" if there is no change.

The plight of the hotel was highlighted by Cllr Gareth Barnard during his state of the borough address to Bracknell Forest Council on 13 May.

It is currently receiving transitional relief but McKelvie said that when relief ends in 2029/30, the business could face an additional £7,000 per month in business rates over a 10-month period compared to what it paid last year.

He described the increase as a "huge hit".

"It is sitting over our heads and completely curtails our investment plans and, as with most others in hospitality, we are reducing staffing where we can and are chasing other efficiencies," he said.

"We have had multiple hits in a short period of time post Covid, from national insurance, living wage, energy costs and now business rates and its causing a huge negative impact on our industry as a whole.

"What we desperately need is a VAT cut in hospitality to 10-12% like the European average.

"We could then afford all of these extra costs and it would give us the confidence to continue investing and growing as a business (and as an industry)."

Cllr Tony Virgo, a regular customer of Stirrups, told the Local Democracy Reporting Service he was "absolutely astonished" at the increases.

"We should be helping businesses, not lumbering them with a huge tax bill.

"I know this is a decision made in central government, but it will affect the local community because they won't be spending the money on investment or staff."

A HM Treasury spokesperson said: "We have the right economic plan - we're backing the high street by reforming business rates, with a £4.3bn support package to limit bills rises, capping Corporation Tax at 25%, cutting red tape and taking action on the cost of living to boost the sector."

Most businesses that have seen increases in their valuations, following the independent assessment by the Valuation Office, will see bills capped at 15% or less next year, or £800 for the smallest.

The Treasury has also cut the business rate tax rate for more than 750,000 retail, hospitality and leisure properties by 5p, funded by higher rates on the top 1% most expensive properties, including many big online warehouses.

As a result warehouses used by online giants pay a 33% higher tax rate than small high street properties.