The Treasury has launched a review into how business rates are calculated for pubs and hotels, in the government's latest effort to support businesses operating in town centres.

Announced on Monday, the review will "look at improving fairness for businesses", the government said, and aims "to ensure the system is fair and transparent, and ensure pubs and hotels can plan better for the future."

Alongside the review, the government has opened a call for evidence inviting landlords, brewers, hoteliers and business owners to comment on the current system.

Business rates are charged on most non-domestic properties, with bills calculated from a rateable value set by the Valuation Office Agency. Pubs are typically valued on their potential trade — an approach known as "fair maintainable trade" — while hotels are assessed largely on their receipts and expenditure, and operators have long argued that tying bills to assumed performance penalises well-run venues.

The announcement follows Burnham's decision at the end of July to cut business rates bills by 20 per cent for pubs, clubs and venues, a change due to take effect from April next year. The government said the £100m commitment will be funded by cracking down on businesses such as vape shops which "do not make a positive contribution to local communities."

Rates are typically among the largest fixed costs for pub and hotel operators after staffing and property, and are payable regardless of how a business is trading — a point trade bodies including UKHospitality and the British Beer and Pub Association have made repeatedly in campaigns arguing the tax disproportionately burdens hospitality venues.

No 10 said further reform, including small business rates relief, will be set out in the autumn Budget.

"Last month we announced tax cuts for pubs to give them the breathing room they need. Today we're going further with a rethink of valuations – so that we can build a fairer system for the future," said James Murray, financial secretary to the Treasury.

Murray added that pubs and hotels "are vital for communities and bringing growth to every postcode."

'Business rates guru' to lead review

The Treasury has enlisted a "business rates guru", Jerry Schurder, to lead the independent review and examine possible changes to the system. He is due to report back to the government by the end of March 2027.

Schurder, a former business rates policy lead at advisory group Newmark UK, said he plans to "assess how the current valuation methodologies for pubs and hotels operate in practice and whether they remain fit for purpose."

"Stakeholder evidence and engagement will be central to informing the review's recommendations," Schurder said. Responses to the call for evidence are set to feed into that work, which is scheduled to conclude after the further rates measures due in the autumn Budget and from next April.