The 2025 Budget has been unveiled by the Chancellor and with it comes significant reform to business rates.
As part of longstanding plans to support the high street, the government has unveiled several changes, one of which is to permanently lower business rates multipliers for retail, hospitality, and leisure (RHL) properties.
The changes are said to be worth an estimated £900 million per year and, according to the Chancellor, are expected to benefit around 750,000 properties across the country, ranging from pubs and shops to leisure facilities.
From 1 April 2026 onwards, the RHL multipliers will be 5p below their national equivalents. This means that the rate for small business RHLs (those properties with a rental value of less than £51,000 a year) will be 38.2p in the pound. The standard RHL multiplier (applicable to those properties worth £51,000 to £499,999) will be 43p in the pound.
These changes mean that from April 2026, small RHL properties will pay the lowest tax rate since 1990-91, and standard RHL properties will pay the lowest tax rate since 2010-11. For other sectors falling outside of RHL following the revaluation, the rate will be 43.2p for small business, and 48p for standard businesses.
In order to fund these cuts to business rates, the government will be introducing a higher rate for the most valuable properties, meaning that those properties valued at £500,000 or more will see their multiplier set at 2.8p above the national standard, meaning this high-value multiplier will be 50.8p in 2026-27.
The higher rate is expected to affect around 1% of properties and will likely affect business such as distribution warehouses used by large online retailers. This higher rate is an attempt by the government to recognise the important role these businesses play in the government’s growth plans.
Recognising that some ratepayers may need support following the revaluation in this Budget, the government will also be rolling out a transition relief package.
This package, aimed at supporting ratepayers facing large bill increases at the revaluation, is worth £3.2 billion over the next three years, providing more generous support for those paying the higher tax rates. Whilst some ratepayers might see hikes in their bills, it is also estimated that over 50% will see no increase at all, and that 23% will in fact see their bills go down.
While the changes could be seen as a positive move by the government to give lifelines to small businesses, the ramifications on larger businesses having additional tax burdens placed on them could be significant.
Whether you're a property owner, retail operator, or commercial occupier, understanding how these changes impact your rates liability is essential.
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Our team are here to help you prepare for the road ahead. If your business is likely to be affected by these changes, get in touch with our solicitors today. Early legal insight can help you anticipate costs, unlock opportunities, and plan for sustainable growth.
