The UK government is setting the stage to implement its reforms to the business rates system, aiming to create a fairer structure that supports high street businesses, encourages investment, and adapts to the 21st-century economy.

These changes, announced in the Autumn Budget 2024, will be phased in over the next two years culminating, in what they claim, will be “a major transformation” alongside the 2026 property revaluation.

Further details were published yesterday (February 17^th) in its Business rates: forward look policy paper, but you can find a summary here:

Key Reforms

Permanent Support for High Street Businesses

From April 2026, the government will introduce two lower multipliers for Retail, Hospitality, and Leisure (RHL) properties with rateable values (RVs) below £500,000. This change aims to provide longer-term certainty and support for high street businesses, replacing the previous yearly RHL relief system.

New Multiplier Structure

The new system, effective from 2026-27, will include:

• Small business RHL multiplier for RHL properties with RV below £51,000
• Standard RHL multiplier for RHL properties with RV £51,000 – £499,999
• Large multiplier for all properties with RV £500,000 and above
• Small business multiplier for non-RHL properties with RV below £51,000
• Standard multiplier for non-RHL properties with RV £51,000 – £499,999

This structure aims to create a more balanced system, with larger properties, including those used by online retailers, contributing more to fund the lower rates for high street businesses.

Legislative Changes

The Non-Domestic Rating (Multipliers and Private Schools) Bill, introduced on November 13, 2024, sets limits on the new multipliers:

• The large multiplier cannot exceed the standard multiplier by more than 10p
• The standard and small RHL multipliers cannot be lower than 20p less than the small business multiplier

Implementation Timeline

1. Autumn Budget 2024: Announcement of 2025-26 support and new multipliers
2. Q4 2024 – Q1 2025: Policymaking and legislative process
3. Q2 – Q3 2025: Further stakeholder engagement and policy refinement
4. Budget 2025: Announcement of multiplier rates for 2026-27 and Transitional Relief scheme details
5. Q1 2026: New multipliers come into effect

2026 Revaluation

The reforms will coincide with the routine business rates revaluation, updating rateable values based on April 1, 2024 property values. This revaluation aims to maintain fairness by redistributing business rates liabilities among ratepayers.

Transforming Business Rates

The government has published a Discussion Paper, “Transforming Business Rates,” inviting industry input to co-design a fairer system. Stakeholders can submit written representations until March 31, 2025. Further information regarding the Discussion Paper and how to make written representations can be found at: Transforming business rates – GOV.UK.

You can find more information about the overall Policy Paper at: Business rates: forward look – GOV.UK

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