The hotel sector faces a £1bn business tax bomb that could quadruple its bills

Pubs and restaurants have urged the Chancellor of the Exchequer to stop a “billion-pound tax bomb” that could quadruple their bills.

UK Hospitality said businesses face a “devastating cliff edge” in April when business rates relief is due to end.

The group, which represents more than 100,000 establishments, is calling for a permanent reform to replace Covid-era aid.

The relief will see all hospitality and leisure businesses reduce their business tax bill by 75 per cent, with the rebate capped at £110,000 per business.

Business taxes are a local tax based on the value of a commercial property, meaning stores pay a premium compared to online giants like Amazon.

During the pandemic, there was 100 percent relief between 2020 and 2022, then 50 percent the following year and then extended to 2025.

But the relief will end on March 31, hitting hospitality firms with an extra bill of £928m.

Labour has promised reforms, saying the system “discourages investment, creates uncertainty and places an undue burden on our high streets”.

In its manifesto, the party promised to “replace the business tax system, so we can raise the same revenue but in a fairer way.”

But businesses are concerned that the renovations will take too long and that many stores could close before then.

High Street businesses have called on Rachel Reeves to take urgent action in her first budget on October 30. They want to see a permanent, lower rate used to calculate how much businesses should pay, which would translate into lower bills.

Concerns have been exacerbated by Reeves’ warnings that there will be “tough decisions” to be made in the Budget.

Business taxes are among those he has not ruled out raising, saying he needs to plug a £22bn “black hole” in the country’s finances.

There are also concerns about a possible increase in capital gains tax and an assault on pensions.

Business rates are another headache for employers as they await further details on Housing Secretary Angela Rayner’s plan for workers’ rights.

Some have warned that the reform package, including “basic” day-one entitlements such as sick pay, could hit jobs and economic growth.

A permanent, universal lower rate, or “multiplier,” for hospitality would be a critical first step toward achieving that change.

Kate Nicholls, chief executive of UK Hospitality, said: “Hospitality businesses face a devastating cliff edge next April, when many will see their bills quadruple. The scale of this nearly £1bn tax bomb is simply not viable.

Many will face the risk of closure, will be forced to lay off people to stay afloat or to shelve their investment plans.

A typical pub in a market town could see an increase of just over £11,000 on its bill, while standard seaside hotels could face a rise of £40,000, according to UK Hospitality.

A Treasury spokesman said: “We are committed to a fairer corporate tax system.”

Elsewhere on the high street, retailers such as Currys and Marks & Spencer have called for the pricing system to be reformed.