10th March 2025 - James Burkitt

The Government have recently published a policy paper called ‘Business Rates: forward look’. Whilst many businesses will be grappling with new 2025/26 business rates bills landing through the post, this paper looks forward to the 2026/27 billing year and beyond.

The Government’s aim is to create a business rates system that supports investment and is fit for the 21^st Century, with the following steps announced:-

Multipliers

It has been confirmed that lower multipliers for Retail, Hospitality and Leisure (RHL) properties will be funded through the introduction of a Large Multiplier (for all properties with a 2026 Rateable Value of £500,000 and higher). This is intended to be a re-balancing act. In order to assist struggling retailers, the Government wants to increase the business rates liability for ‘online giants’; however the Large Multiplier is not restricted to only include distribution warehouses but can apply to any type of property e.g. Large shops, Schools etc.

The new 2026/27 multipliers will be as follows:-

• Small business multiplier (non-RHL properties & RV below £51,000)
• Small business RHL multiplier (RHL properties & RV below £51,000)
• Standard multiplier (non-RHL properties & RV between £51,000 to £499,999)
• Standard multiplier (RHL properties & RV between £51,000 to £499,999)
• Large multiplier (all properties RV £500,000 and above)

Simply put, Annual Business Rates liability = Multiplier x Rateable Value (after this reliefs are applied) and therefore the multiplier or reliefs adopted have a significant impact on business rates liability. 

This paper confirms the Large Multiplier can be no more than 10p higher than the Standard Multiplier and the RHL multiplier can be no lower than 20p less than the Small Business Multiplier.

The introduction of the new multipliers will tie in with the ending of the current Retail, Hospitality and Leisure Relief scheme which for the 2025/26 billing year provides 40% relief to eligible properties. The eligibility criteria for the new multipliers, to be set through secondary legislation, will broadly reflect the existing RHL relief criteria.

Timeline

The Government has provided a timeline for the legislative process and further stakeholder engagement as follows:-

• Q4 2024 – Q1 2025 – Policymaking and legislative process / initial stakeholder engagement across all sectors and policy making
• Q2 2025 – Q3 2025 – Policymaking and legislative process / further stakeholder engagement on specific reform options
• Q3 2025 – Q4 2025 – Budget 2025: Announcement of all multiplier rates for 2026-27 and details of Transitional Relief Scheme / Budget 2025: Announcement of reforms

Conclusion

The recent changes are probably best described as a ‘Smoke and Mirrors’ approach. For the 2025/26 billing year many small Retail, Hospitality & Leisure properties have seen their relief reduce from 75% to 40%, more than doubling business rates liability from one month to the next.

The Government’s policy paper does not help smaller retail/leisure businesses in the short term. This is an announcement on multipliers that have not yet been set against 2026 Rateable Values, that have not yet been decided and will therefore provide little comfort for businesses struggling to settle their current bills. 

We do expect the Valuation Office Agency will see an influx of business rates appeals for this class of property and if you need any assistance with reviewing your 2025/26 bills or with the appeals process then please don’t hesitate to get in touch.