Business rates reform is back on the table, and for once the direction of travel favours the little guy. The government has set out plans to permanently lower business rates for smaller retail, hospitality and leisure premises from April 2026, paying for it by charging a higher rate on the most valuable properties, which in practice means the large distribution warehouses used by online giants and big supermarket chains. In short, the reform of business rates in Britain would ease costs for small shops and shift more of the tax burden towards big retailers.
If you run a cafe, a barber’s, a bookshop or a boutique on a UK high street, the headline answer is this: your annual rates bill could fall, or at least stop climbing, while the warehouse-heavy businesses you compete with online pay more. Nothing is settled yet, the detail is still being worked through, and the numbers that matter (the exact multipliers) will not be confirmed until closer to the 2026 to 2027 tax year. But the principle has been announced, and it is worth understanding now so you can plan and, crucially, check that you are not overpaying today.
What are business rates, in plain English?
Business rates are a tax on non-domestic property: shops, offices, pubs, workshops, warehouses and the like. In England they are worked out by taking your property’s rateable value (an estimate of its annual open-market rent, set by the Valuation Office Agency, part of HMRC) and multiplying it by a figure called the multiplier, set by central government. Your local council then sends the bill and collects the money.
For 2024 to 2025 in England there are two multipliers: the small business multiplier of 49.9p and the standard multiplier of 54.6p. So a shop with a rateable value of £20,000 on the small business multiplier faces a headline bill of roughly £9,980 a year before any reliefs are applied.
Business rates are devolved, so Scotland, Wales and Northern Ireland run their own systems with their own poundage rates and reliefs. The reform described here applies to England. If you trade elsewhere in the UK, check your national scheme, but the wider political mood of protecting high streets and taxing large online-focused property is a common theme.
What is actually changing?
The plan announced in the 2024 Autumn Budget is to introduce permanently lower business rates multipliers for retail, hospitality and leisure (often shortened to RHL) properties with a rateable value below £500,000, from the 2026 to 2027 financial year. To fund that permanent discount without leaving a hole in council budgets, the government intends to apply a higher multiplier to the most valuable properties, those with a rateable value of £500,000 or more.
That £500,000 threshold is the pivot. Very few independent high street shops come anywhere near it. The properties that do are typically the giant logistics sheds and out-of-town distribution centres that power online retail, plus the largest stores and warehouses of national chains. So the “shift” is not really small shop versus big shop on the same street. It is smaller trading premises versus very large property, with the biggest online and warehouse operators expected to shoulder more.
Two things to keep in mind. First, the existing temporary Retail, Hospitality and Leisure relief has already been reduced: it dropped from 75% to 40% (up to a £110,000 cash cap per business) for 2025 to 2026. So some small firms may feel a squeeze in the short term before the permanent lower multipliers arrive. Second, a business rates revaluation takes effect in 2026, which resets everyone’s rateable value based on more recent rents. Your bill from 2026 depends on both the new multiplier and your new rateable value.
A realistic worked example
Take a gift shop in a market town with a rateable value of £14,000. Because that sits below £15,000, it uses the small business multiplier and qualifies for tapered Small Business Rates Relief (properties under £12,000 pay nothing; relief tapers away between £12,000 and £15,000). At £14,000 the taper gives roughly a third off, and RHL relief can reduce the remaining bill further. The practical point: many of the smallest shops already pay little or no business rates, so the reform matters most to the tier just above, the shops with rateable values of, say, £25,000 to £100,000 that fall outside full Small Business Rates Relief but are nowhere near the £500,000 line.
For a busy town-centre restaurant with a rateable value of £60,000, a permanently lower multiplier from 2026 could be the difference between a predictable cost and an annual scramble to see whether temporary relief will be extended. Predictability is often as valuable as the saving itself, because it lets you set prices and plan hiring with more confidence. If cash timing is tight, our guidance on managing cash flow in a small business is worth a read alongside this.
Check you are not overpaying now
Whatever happens in 2026, the most immediate money to be saved is often hiding in your current rateable value. If your premises have shrunk, changed use, lost passing trade, or if roadworks or building work nearby have hit your business, you may have grounds to challenge your assessment through the official Check, Challenge, Appeal process on gov.uk. You can do this yourself for free.
Plenty of owners prefer to use a rating adviser, and this is a market where naming names helps, because the quality and pricing vary widely. Larger established firms include Altus Group, Colliers and Gerald Eve, which handle everything from a single shop to national portfolios. Among the smaller and challenger specialists, RVA Surveyors focuses on business rates for SMEs, and it is worth getting more than one view. A warning from the regulator’s own guidance: some cold-calling “rates agents” overpromise and charge steep fees, so always check credentials with the Royal Institution of Chartered Surveyors (RICS) or the Institute of Revenues, Rating and Valuation (IRRV) before signing anything.
Comparison: ways to manage and challenge your business rates
| Option | Best for | Typical cost | Watch out for |
|---|---|---|---|
| gov.uk Check, Challenge, Appeal (self-serve) | Confident owners with a clear case | Free | Time and evidence gathering fall on you |
| Large rating advisers (Altus Group, Colliers, Gerald Eve) | Higher-value premises, complex or portfolio cases | Often a percentage of savings won, agreed in advance | Confirm fees and scope in writing |
| SME rates specialists (RVA Surveyors and similar) | Single-site independents wanting a hands-off review | Usually success-based fees | Check RICS/IRRV membership; avoid cold-call operators |
| Accounting software (Xero, QuickBooks, FreeAgent, Sage) | Budgeting for and tracking the rates bill | From roughly £10 to £30+ a month | Software records the cost, it does not challenge the valuation |
The last row matters because owners sometimes expect their bookkeeping tool to fight their rates for them. Tools like Xero, QuickBooks, FreeAgent and Sage will help you budget for the bill, spread the cost across the year and keep clean records for your accountant, and our overview of the best accounting software for UK small businesses compares them properly. But the rates challenge itself is a separate job, done through the VOA or an adviser.
What this means for a small business
For most independent high street traders, the reform is cautiously good news. A permanently lower multiplier for smaller retail, hospitality and leisure premises would reduce the constant uncertainty around temporary reliefs and tilt the playing field a little back towards physical shops. If you compete against online sellers, the prospect of larger warehouses paying more is a modest rebalancing in your favour.
It is not a windfall, and it is not confirmed in numbers yet. The sensible response is to get your own house in order: know your rateable value, make sure you are claiming every relief you qualify for, and budget for the 2026 revaluation, which could move your bill up or down regardless of the multiplier. If you are reviewing overheads more widely, it pairs well with a look at how to reduce business overheads.
Frequently asked questions
When will the business rates changes take effect?
The permanently lower multipliers for smaller retail, hospitality and leisure properties are planned for the 2026 to 2027 financial year, which begins in April 2026. A national revaluation also takes effect in 2026. The exact multipliers will be confirmed by the government nearer the time, so treat any specific figure you see now as provisional.
Will my rates bill definitely go down?
Not automatically. Your bill depends on your new rateable value after the 2026 revaluation as well as the multiplier that applies to your property. A lower multiplier helps, but if your rateable value rises because local rents have gone up, the two effects can partly cancel out. Model both before you assume a saving.
What counts as a “big retailer” that pays more?
The higher multiplier is aimed at properties with a rateable value of £500,000 or more. In practice that captures very large premises such as major distribution warehouses and the biggest stores, rather than a large-ish shop on your high street. Almost all independents sit well below that line.
Do these changes apply in Scotland, Wales and Northern Ireland?
Business rates are devolved, so this specific reform applies to England. Scotland, Wales and Northern Ireland set their own poundage rates and reliefs. If you trade in those nations, check your own government’s scheme, though the wider aim of supporting high streets is shared across the UK.
Can I reduce my business rates right now?
Possibly. Check whether you qualify for Small Business Rates Relief, Retail, Hospitality and Leisure relief or any hardship relief through your local council. Then review whether your rateable value is accurate using the VOA process on gov.uk, either yourself or through a reputable rating adviser.
What to do next
- Find your rateable value on gov.uk and compare it against what your premises would realistically rent for today. If it looks too high, gather evidence.
- Check every relief you are entitled to with your local council, including Small Business Rates Relief and the current Retail, Hospitality and Leisure relief.
- Budget for 2026 in your accounting software so a revaluation does not catch you out, and revisit your wider overheads while you are there.
- Get a second opinion from a RICS or IRRV accredited adviser before signing with any rates agent, and never respond to a cold caller promising guaranteed savings.
