Propel legal Briefing: Business rates and beyond – what 2026 means for hospitality by Tim Shield

First appearing for Propel Hospitality in their Legal Briefing on 15th January 2026

Business rates and beyond – what 2026 means for hospitality by Tim Shield

We had our annual meeting with our bank manager this week, during which I was asked what I thought the coming year might hold for both our business as licensing lawyers and the hospitality industry more broadly. It’s a question I’m often asked, and one that never has a simple answer.

Our work is closely tied to the fortunes of the hospitality industry, which continues to operate in what can only be described as challenging conditions. That said, recent years have shown that hospitality is a resilient industry, and I remain cautiously optimistic that it will continue to adapt and endure, whatever lies ahead.

What we know so far

We have seen a number of announcements from the government as to what it intends to do to try to support the sector, along with a number of leaks of proposals and consultations. This has given us a better feel of what we can expect coming in 2026 in terms of changes to the licensing laws and other policies that will affect the sector. These are by no means set in stone at this stage, but it helps paint a picture of what is to come.

Business rates

At the forefront of everyone’s minds right now is business rates. The government has indicated a U-turn on planned rises to pubs’ business rates bills in England, following pressure from landlords and industry groups. In her November Budget, the chancellor scaled back the pandemic-era discounts from 75% to 40, for 2025-26, with no discount planned from April 2026 onwards, and combined with big upward adjustments to the rateable value of pub premises, this had left many landlords facing significantly higher bills. The proposed changes are expected to limit those increases and ease some of the immediate financial pressure.

While the support currently appears to apply only to pubs rather than the wider hospitality sector, there is pressure for this policy to be expanded. It also reflects the persistent lobbying from industry groups. While changes like these do not solve every issue, the move serves as an important sign that the pressures faced by the sector are being recognised.

Licensing guidance

But what about licensing specifically? On a positive note, there already has been a small and subtle change to the national guidance issued to licensing authorities under Section 182 of the Licensing Act. This came into place in late November, and it could have a significant impact on how decisions are made at a local level. It reads: “When making licensing decisions, all licensing authorities should consider the need to promote growth and deliver economic benefit.”

At first glance, this may appear to be a modest change, but it could have real significance in practice. Licensing hearings are often dominated by representations against applications, and there can be a tendency for decision making to focus heavily on potential risks rather than on the broader benefits a proposal may bring. A licensing sub-committee should now also give proper weight to the positive aspects of an application, including its potential economic and community benefits. This marks the first time since the Licensing Act came into force in 2005 that such a principle has been specifically reflected in licensing guidance.

Possible licensing reforms

Alongside this change in guidance, a call for evidence on alcohol licensing reform closed on 6 November last year. While it is not yet clear which proposals will be taken forward, the exercise highlighted several areas under consideration, including increasing or amending the number of temporary event notices a venue can use each year, removing the requirement to advertise certain applications in the press and simplifying the process for removing obsolete or unnecessary conditions from premises licences.

The current system already allows conditions to be removed by way of a minor variation, but it remains to be seen whether this process can be strengthened or simplified as part of any reform. Clear national guidance will be essential to support this aim and ensure a consistent approach from licensing authorities, particularly those that tend to be more cautious. Reducing or removing the application fee for such variations could also encourage operators to review their licences and take advantage of any changes.

Digital identification

Following the Budget, the government also published the National Licensing Policy Framework (NLPF), and it will be interesting to see how it influences licensing decisions and the wider approach to licensing in the months ahead. The most recent development relates to digital identification, an area that has been under discussion for some time.

On 7 January, the Office for Digital Identities and Attributes published an update confirming that the Home Office remains committed to enabling the use of digital verification services as acceptable proof of age for alcohol sales in England and Wales. The update acknowledged that this is a complex area of law and confirmed that it was not possible to amend the NLPF last year as originally planned. However, it also confirmed that the necessary secondary legislation is now being drafted, with a view to implementation as soon as possible this year.

Where this leaves us

I recognise that licensing law is only one of many factors affecting operators in the hospitality sector, and that businesses are currently facing far wider pressures in terms of costs, staffing and broader economic challenges. That said, what we have seen over the past year is a period of testing and transition. A number of initiatives have been explored, and some changes have already been implemented, including updated guidance and the introduction of the NLPF.

How these developments play out in 2026 remains to be seen, but the hope is that licensing decisions and wider government policy adopt a balanced and proportionate approach, recognising the vital role hospitality plays in local communities and the economy.

Tim Shield is a partner at John Gaunt & Partners