Business Rates "Forward Look": What the Latest Updates Mean for Your Business

The UK government is implementing major reforms to the business rates system over the next few years. These changes aim to create a fairer, more modern business rates system that protects high street businesses and ensures large properties pay their share.

Permanent Relief for High Street Businesses (from 2026)

One of the headline changes is a new permanent business rates relief for Retail, Hospitality and Leisure (RHL) properties with rateable values under £500,000. Starting April 2026, these properties will benefit from two new lower tax "multipliers" (rates), replacing the temporary RHL discounts that had to be renewed annually. In other words, small and mid-sized shops, pubs, restaurants, hotels and similar properties will pay lower business rates long-term – a move designed to give certainty and support to the high street.

Why this matters

Previously, RHL businesses received short-term reliefs (often a percentage discount with a cap) that were announced year-to-year. This created uncertainty and a "cliff-edge" each year when the relief could end. By legislating a permanently lower rate, the government is ensuring ongoing tax relief for high-street businesses without annual renewals. There will be no overall cap on this relief – all qualifying properties can benefit fully (unlike past schemes that capped the total relief a business could claim).

How it works

Under the new structure, if you own an RHL property with a rateable value below £500k, you'll fall into one of two preferential categories:

• A small business RHL multiplier for properties with RV below £51,000, and
• A standard RHL multiplier for properties with RV £51,000 to £499,999.

These two tiers mirror the existing small business vs. standard thresholds, but apply only to RHL-use properties. The exact reduced rates (pence in the pound) for these multipliers will be set in the Autumn 2025 Budget, but legislation has indicated they could be up to 20p lower than the normal rate. In practice, that's up to a ~40% tax reduction for eligible businesses.

Eligibility

To qualify, a property must be occupied and used wholly or mainly for retail, hospitality, or leisure purposes, and open to the public (e.g. shops, restaurants, bars, cinemas, hotels). The vast majority of high street consumer-facing businesses will meet these criteria. Notably, making this relief part of the tax system (via a lower multiplier) means it's automatically applied to all qualifying properties without needing a special application each year.

This permanent RHL relief delivers on the government's promise to "support the high street with permanent cuts to business rates". For many small businesses, it could mean substantial savings on their rates bills from 2026 onward. It also helps level the playing field between brick-and-mortar shops and large online retailers (who typically occupy massive warehouses rather than high street premises).

New "High-Value" Rate for Large Properties

To fund the high street relief in a revenue-neutral way, the government will introduce a new higher business rates multiplier for "high-value" properties – those with a rateable value £500,000 or above. From April 2026, any property (of any sector) above this £500k RV threshold will pay a higher tax rate on its occupier's bill, compared to the standard rate.

Who is affected

This change targets a small number of properties at the top end of the value scale – less than 1% of all properties – but importantly, it "captures the majority of large distribution warehouses, including those used by online giants." In other words, mega-warehouses and fulfillment centers of online retailers (think large e-commerce companies) will fall into this high-value category. Many large format stores, supermarkets, or big hotel complexes could also have RVs over £500k, meaning some big high street names will be impacted as well.

How much higher

The Non-Domestic Rating Act 2025 (more on this below) imposes a safeguard that the high-value multiplier can be at most +10 pence above the standard rate. This is a legal cap to prevent an excessive gap. The actual differential will be determined in the Budget, but expect a modest increase. For example, if the standard multiplier were around 50p, the high-value multiplier might be up to 60p (just illustrative). The intent is that large, profitable sites pay a slightly larger share of the tax, helping fund the relief for smaller businesses.

Rationale

This move is explicitly aimed at "levelling the playing field between the high street and online giants" by ensuring warehouses and very large properties (often benefiting from economies of scale or online sales) contribute more fairly. It's a shift towards a more progressive system: smaller properties get a tax cut, while the largest properties see a tax rise. For big operators, this means higher rates bills from 2026 – something to factor into budgets and perhaps an incentive to review your property portfolio strategy. For example, large retailers with many mid-sized stores under £500k RV could gain in some sites but pay more on any flagship sites over £500k.

Importantly, all other properties (non-RHL under £500k) will continue to use the existing "small" or "standard" multipliers as appropriate. Only the RHL sector gets the special lower rates under £500k, and only £500k+ properties get the special high-value rate. This creates a tiered system of five multipliers from 2026 onward:

• Small business RHL multiplier (RHL properties < £51k RV) – lowest rate
• Standard RHL multiplier (RHL properties £51k–£499,999 RV)
• Small business multiplier (non-RHL properties < £51k RV)
• Standard multiplier (non-RHL properties £51k–£499,999 RV)
• High-value multiplier (all sectors ≥ £500k RV) – highest rate

(The specific rates for each will be announced in late 2025, closer to implementation.)

Legislative Framework and Safeguards

To enact these changes, the government passed the Non-Domestic Rating (Multipliers and Private Schools) Act 2025, which received Royal Assent on 3 April 2025. This legislation provides the legal basis for the new multipliers and also sets some important guardrails on how they can be applied:

• The High-Value multiplier rate cannot exceed the Standard multiplier by more than 10 pence. This ensures the premium on large properties remains within reasonable bounds.
• The RHL multipliers (both small and standard RHL) cannot be more than 20 pence lower than the Small Business multiplier. In other words, the tax cut for RHL properties is capped at 20p below what other businesses of similar size pay. This roughly equates to a maximum ~40% discount for RHL businesses, preventing an overly deep subsidy and maintaining fairness across the tax base.

These maximum and minimum limits are not the actual intended rates – they are simply leeway for the Treasury when setting the precise numbers. The guardrails are there to reassure stakeholders that, for instance, the high-value rate won't be dramatically higher than the norm, and the RHL rates won't undercut the base rate by more than a certain amount.

Stakeholder input

Tax rates (multipliers) are typically set by government without formal consultation. However, given the significance of these changes, officials have indicated that businesses and industry groups are welcome to submit representations ahead of the Autumn 2025 Budget if they have views on the new rates. This provides an opportunity for sectors to voice concerns – for example, large retail chains might lobby for a minimal high-value premium, while small business groups might argue for the full 20p RHL discount. Engaging in this process could be worthwhile if your business will be significantly affected.

(Note: The Act's title also references "Private Schools" – indeed, it included separate provisions to remove certain tax exemptions for private schools. While outside the scope of this article, it's another change in the drive for fairness.)

The 2026 Revaluation and Transitional Relief

All of the above changes will coincide with a regularly scheduled business rates revaluation in England, effective 1 April 2026. Revaluations occur every three years and update the rateable values (RVs) of properties to reflect more current market rents and conditions. The 2026 revaluation will use property values as of April 2024 as its baseline.

What to expect

Revaluation redistributes the total rates burden based on changes in relative property values – it "maintains fairness in the system by redistributing liabilities" and is not intended to raise extra revenue overall. In practice, some sectors or locations that saw big rental growth may find their RVs (and thus bills) increase, while others where values stagnated or fell could see reductions. For example, if warehouse rents rose faster than high street shop rents from 2021-2024, warehouses' RVs might jump in 2026 while shops might increase modestly or even decrease. This realignment is on top of the new multiplier structure – meaning 2026 will bring a double whammy of changes to rate bills.

Transitional relief

The government has signaled it will support ratepayers facing large bill increases due to revaluation by introducing a Transitional Relief scheme. Transitional relief typically phases in increases over a few years, capping how much a bill can rise annually. We won't know details until the Budget (scheduled for 26 November 2025), but businesses that see a big jump in RV should get some cushioning in 2026-27 and beyond. Keep in mind: if your RV drops in 2026, you'll benefit immediately from a lower bill (downward transitions were abolished for the 2023 revaluation in England, and it's likely 2026 will similarly allow instant decreases while phasing in increases).

Key dates

By the end of 2025, the Valuation Office Agency (VOA) is expected to publish draft 2026 rateable values for all properties, so you can check your new RV in advance. The Autumn Budget 2025 will confirm:

• The exact multipliers for 2026/27 (standard, small, RHL, high-value, etc.), and
• Details of the transitional relief scheme and any other support measures.

Final new bills will be issued before April 2026 based on the new values and rates. The final 2026 rating list takes effect on 1 April 2026.

What you should do now

Review your current rateable values and get a sense of how the 2024 property market values (the revaluation baseline) compare for your sector. If you suspect your new RV is going to be significantly higher than currently, prepare for an increase (though transitional caps may soften it). Conversely, if your sector has struggled (e.g. some retail locations), you might anticipate an RV decrease – ensure you're not overpaying once the new list comes out. It may be wise to consult a rating advisor to estimate your 2026 RV and identify any grounds for appeal or reliefs.

Ongoing Reforms: Transforming Business Rates Initiative

Beyond the specific measures already decided for 2026, the government has a broader agenda to modernise the business rates system. At the Autumn 2024 Budget, alongside announcing the above changes, HM Treasury launched a discussion paper titled "Transforming Business Rates" that opened the door to more sweeping reforms. The aim is to address longstanding criticisms and ensure the system is "fit for the 21st century".

Stakeholder engagement

The response has been significant. In the first half of 2025, over 250 stakeholders representing 230 organizations participated in roundtable discussions, and more than 140 written submissions were received by the Treasury. This extensive feedback has been compiled into an Interim Report (published 11 September 2025) which summarizes industry views and outlines priority areas for reform the government is considering.

Areas of interest

While the full list is lengthy, some key themes on the table include:

• Moving to a "slab" or "slice" system – i.e. introducing more bands or progressive rates so that properties with higher values pay proportionately more (beyond just the single £500k high-value band).
• Reviewing Improvement Relief – ensuring businesses aren't disincentivized from upgrading their properties due to immediate RV increases (so that investing in property improvements is encouraged, not penalized).
• Strengthening anti-avoidance measures – giving authorities tools to crack down on avoidance tactics (for example, periodic short-term occupancy to evade empty property rates).
• Re-examining Empty Property Relief – the rules and relief for vacant properties, to strike a balance between encouraging property use and not overburdening owners of unoccupied sites.
• Digitalising and streamlining the rates system – including new compliance obligations such as the upcoming "duty to notify" changes to the VOA and annual return requirements, aimed at keeping the rating list up-to-date in real time.

Timeline for reform

The government views business rates reform as a multi-year journey. According to the Forward Look, any further changes will be phased in over the course of this Parliament (likely through 2026–2029). We can expect an update on the next steps in the Autumn Budget 2025, and potentially new pilot programs or targeted changes in the following years. Crucially, there is no plan to scrap business rates entirely in favor of a new system (such as a land value tax) at this stage – the focus is on incremental improvements to the existing framework.

The bottom line is that more changes are coming, but gradually. By engaging with the process now (as many have), businesses can help shape a fairer system. And as reforms roll out, staying informed will be key to taking advantage of new reliefs or navigating new rules.

Timeline of Key Dates and Milestones

To recap, here are the key milestones in the business rates reform timetable that businesses should mark on their calendars:

• Autumn Budget 2024 (Oct 2024): Announced intention for new RHL and high-value multipliers; "Transforming Business Rates" discussion paper released.
• Q2–Q3 2025 (Spring/Summer 2025): Stakeholder consultation and policy development on reforms; legislative process for new multipliers (Non-Domestic Rating Act passed in April 2025).
• 11 Sep 2025: Interim Report on business rates reform published, summarizing consultation feedback and priority reform areas.
• 26 Nov 2025 (Autumn Budget 2025): Crucial announcement of: 1) 2026-27 multipliers (actual rates for small/standard/general/high-value categories), and 2) Transitional Relief details for the 2026 revaluation. Also, likely updates or decisions on some reform proposals.
• Dec 2025: Draft 2026 Rating List (new Rateable Values for all properties) published by VOA for review.
• 1 April 2026: New system goes live: New multipliers and reliefs take effect, 2026 revaluation comes into force (final values list published). Businesses will start paying based on the new rates and values. Transitional relief (if applicable) begins to phase in changes.
• 2026–2029: Further business rates reforms to be phased in over the Parliament. Watch for annual Budget statements or consultations introducing changes to reliefs, compliance obligations, and possibly new banding structures.

Preparing for the Changes – What Should You Do?

With significant changes on the horizon, now is the time for businesses to plan and ensure they are prepared for the 2026 business rates reset. Here are some key steps and considerations:

1. Assess Your Portfolio

Review the rateable values of your properties. Identify which ones are likely to fall under the new RHL relief (RVs < £500k in retail/hospitality/leisure use) and which, if any, might be subject to the high-value multiplier (≥ £500k RV). Understanding where you stand will help estimate the potential impact on each property's rates bill.

2. Budget for 2026–27

While we await exact multiplier figures, you can do scenario planning. For instance, if you have a warehouse around the £500k mark, consider the possibility of a ~10-20% rates increase. If you operate shops or restaurants, anticipate the promised rate cuts. Keep an eye out for the draft RV list in December 2025 – it will allow you to calculate preliminary bills (we can assist with this once the data is out).

3. Consider Reliefs and Appeals

If a property's draft 2026 RV seems too high or incorrect, be ready to engage with the VOA's "Check, Challenge, Appeal" process once the new list is in force. Additionally, explore any other reliefs you might be eligible for (small business relief, etc.) in light of the new values. For empty properties or those undergoing improvements, see how upcoming reform proposals might benefit you, and consider timing works or occupancy to maximize relief.

4. Stay Informed on Reforms

The business rates landscape will continue to evolve. Subscribe to updates or follow industry news around each Budget. New relief schemes or duties (like the annual returns to VOA requirement coming soon) could mean new responsibilities – or opportunities – for your business. Being aware early will keep you compliant and possibly save you money.

5. Get Expert Advice

Navigating business rates can be complex, especially with a more layered system of multipliers and an upcoming revaluation. Our team of business rates experts is closely following these developments. We can help model your 2026 liabilities, handle communications with the VOA, and identify strategies to mitigate increases or secure reliefs.

In summary, the Business Rates Forward Look outlines a future where the tax burden is a bit more balanced: high street businesses will get a much-needed break, while online giants and large properties contribute a bit more. It's a positive step for many of our clients in retail, hospitality, and leisure, and part of a broader push to modernize a historically challenging tax. Change, however, often brings questions. If you're unsure about how these updates will affect you, or you want to prepare ahead of time, feel free to get in touch with our team. We're here to help you interpret the fine print and plan a strategy that keeps your business on the front foot.

If you have any questions about the upcoming business rates changes or would like a personalized impact assessment for your properties, contact our experts at VacatAd. We're happy to help you navigate these reforms and ensure you're ready for April 2026 and beyond.