Business rates reforms continue: What it means for you
26-11-2024
The government has now published the legislation to deliver the business rates changes announced in the recent Budget. These reforms, set to take effect from the 2026/27 tax year, are designed to create a more balanced system, with notable benefits for smaller retail, hospitality, and leisure (RHL) businesses.
Here’s what you need to know and how it might affect your business.
Relief for retail, hospitality, and leisure
Businesses in the RHL sectors with properties valued below £500,000 will benefit from “two permanently lower business rates multipliers”. This means a reduced tax bill for smaller high-street businesses, which could free up funds for growth, staffing, or other operational priorities.
Of course, RHL properties have already been receiving temporary relief to their business rates charges. However, the legislation will make permanent adjustments so this should provide greater stability of RHL businesses to plan.
Any relief here is likely to be welcome since high-street businesses are facing tough competition. The BBC recently reported that footfall in Ipswich town centre fell by a third in the past year. So, the high street is under significant pressure to find and maintain sales.
Larger properties to shoulder more
From 2026/27, properties with rateable values of £500,000 or above will see their rates increase, as a higher multiplier will apply. If you operate in higher-value premises, it’s worth factoring this into your financial planning.
This move is because the government intends to fund the reduced rates for smaller businesses sustainably by shifting some of the tax burden to higher-value properties. This may particularly be aimed at large warehouses used by the online giants, but isn’t limited to these firms.
How to prepare
Although these changes are still a couple of years away, there are steps you can take now to ensure you’re ready:
- Assess your properties: Review the rateable values of your properties to understand where you will fall under the new system.
- Review your current rates bill: Make sure that your property is currently being valued and assessed correctly. Agreeing necessary changes with the local authority can take time and effort, but will be worthwhile to make sure that you are getting any relief your business is due.
- Plan for rate increases: Larger businesses, particularly those in premium or urban locations, should start budgeting for the higher multiplier to avoid surprises when the changes take effect.
Looking ahead
Precise definitions of which businesses qualify for the lower rates, as well as the exact multipliers, will be confirmed by Autumn 2025. This clarity will be crucial for understanding the full impact of the reforms on your business.
For now, the key takeaway is that relief is on the horizon for many smaller RHL businesses, while larger property holders should begin preparing for increased costs.
If you’d like to discuss what these changes might mean for your business, please get in touch. We would be happy to help!