As we enter 2026, commercial property owners face a critical period of change. With the Spring Budget expected in March and the April 2026 revaluation now just months away, understanding what's on the horizon for business rates reform is essential for strategic planning.
The current Labour government has made business rates reform a manifesto commitment, promising to "level the playing field" between online and physical retailers. With £31.5 billion in annual business rates revenue at stake, any changes will have profound implications for commercial landlords, retailers, and the wider property market.
The April 2026 Revaluation: What We Already Know
The scheduled revaluation on 1st April 2026 will update rateable values based on market rental values as of 1st April 2023. This three-year lag means properties will be assessed on pre-cost-of-living-crisis valuations – a timing that creates both opportunities and challenges.
Key Revaluation Facts
- Valuation Date: 1st April 2023 (rental values)
- Implementation Date: 1st April 2026
- Properties Affected: Approximately 2 million commercial properties across England
- Historical Impact: 2023 revaluation saw 76% of properties face rate increases before transitional relief
- Average Change: VOA estimates suggest +7-12% in rateable values for most commercial sectors
Expected Budget Announcements: Expert Predictions
1. More Frequent Revaluations (High Probability)
Industry experts and government statements strongly suggest a move from five-yearly to three-yearly revaluation cycles. The rationale is compelling: shorter cycles mean rateable values track market changes more closely, reducing the shock of large adjustments and improving fairness.
Timeline Prediction: First three-year cycle likely to begin in 2029, with valuations based on 2026 rental evidence. This gives the VOA time to streamline processes and improve data collection systems.
Impact for Landlords: More frequent revaluations mean less certainty but potentially smaller fluctuations. Portfolio planning will require ongoing market monitoring rather than five-year strategy cycles.
2. Online Sales Tax or Higher Multipliers for Large Distribution Centers (Medium-High Probability)
The government's desire to support high street retail could manifest in several ways:
Potential Retail Support Mechanisms
| Measure | Probability | Estimated Impact | Implications |
|---|---|---|---|
| Retail Relief Extension | Very High | 40-50% relief for retail properties under £100k RV | Direct support for physical retail; likely capped per business |
| Higher Multiplier for Large Warehouses | High | Warehouses >100,000 sq ft could see 10-15% multiplier increase | Targets online fulfillment centers; may increase logistics costs |
| Online Sales Tax | Medium | 1-2% levy on online sales revenue | Alternative to higher warehouse rates; politically challenging |
| Differential Multipliers by Sector | Medium | Lower multipliers for hospitality/retail, higher for industrial | Complex to administer; precedent exists in Scotland |
What This Means: Owners of large distribution warehouses and fulfillment centers should budget for potential 8-12% increases in business rates bills beyond the revaluation impact. Conversely, retail landlords may see enhanced support mechanisms that improve tenant viability.
3. Reform of Empty Property Relief (Medium Probability)
Current empty property relief allows three months (industrial) or six months (other properties) of rate-free vacancy. However, with an estimated 700,000+ vacant commercial properties across England and ongoing pressure on local authority funding, reform is being actively discussed.
Potential Changes:
- Shorter Relief Periods: Reduction from 3-6 months to potentially 1-3 months
- Stricter Eligibility: Requirements to prove active marketing or refurbishment plans
- Differential Treatment: Longer relief for properties undergoing significant redevelopment
- Anti-Avoidance Measures: Tightening of beneficial occupation rules to prevent "token" usage
Strategic Implication: If empty property relief is curtailed, the economic case for legitimate beneficial occupation solutions like VacatAd becomes even stronger. Landlords should develop void management strategies that assume shorter relief periods.
4. Transitional Relief Adjustments (High Probability)
Transitional relief schemes have historically capped year-on-year increases (and decreases) following revaluations. The 2023 scheme limited increases to 5% (small properties), 15% (medium), and 30% (large properties) in year one.
2026 Prediction: Similar caps likely, but with potential variations:
- More generous caps for retail and hospitality sectors (potentially 5-10% maximum increases)
- Less generous caps for sectors with strong growth (e.g., industrial, data centers)
- Extended phase-in periods – possibly 5 years rather than 3 for significant changes
- Simplified administration to reduce VOA workload
Projected Bill Impact Scenarios (Retail Property Example)
Property Profile: High street retail unit, current RV £45,000
| Scenario | New RV (2026) | 2026/27 Bill (No Relief) | With Transitional Relief | With Retail Relief (40%) |
|---|---|---|---|---|
| Optimistic Rental market softening |
£43,000 | £21,070 | £21,070 (decrease capped) | £12,642 |
| Realistic Modest rental growth |
£49,000 | £24,010 | £23,175 (5% cap) | £13,905 |
| Challenging Strong rental inflation |
£54,000 | £26,460 | £24,255 (10% cap) | £14,553 |
Calculations assume standard multiplier of 49%, retail relief extended at 40%, and transitional relief caps of 5-10% for retail properties. Small business rate relief also available for eligible properties.
The Wild Cards: Low Probability, High Impact Changes
Fundamental System Reform (Low-Medium Probability)
There have been long-standing calls for more radical reform of the business rates system. While unlikely in the 2026 Budget, landlords should be aware of longer-term possibilities:
- Land Value Tax: Replacing business rates with a tax on land value rather than property value. Advocated by economists but politically difficult.
- Commercial Landowner Levy: Shifting liability from occupiers to owners for certain property types, particularly vacant properties.
- Revenue-Based Taxation: Business rates calculated as a percentage of turnover rather than property value – would fundamentally change retail economics.
- Capital Value Basis: Using capital values rather than rental values, similar to council tax for residential properties.
Timeline: If fundamental reform is pursued, expect a consultation period in 2026-27 with implementation no earlier than 2029-2030. The political and administrative complexity makes short-term radical change unlikely.
Regional Multiplier Variations (Low Probability)
Currently, business rates multipliers are set nationally (with Scotland having separate rates). Some policy experts have suggested regional variations to reflect economic disparities, similar to how council tax bands vary by region.
Arguments For: Could support regeneration areas, account for regional cost differences
Arguments Against: Adds complexity, potential for businesses to relocate, reduces transparency
Verdict: Unlikely in 2026 but may feature in longer-term reform discussions
How Commercial Landlords Should Prepare
Q1 2026: Pre-Budget Actions
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Conduct Portfolio Revaluation Analysis
Work with rating surveyors to estimate new rateable values based on 2023 rental evidence. Identify properties likely to see significant increases or decreases.
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Review Tenant Lease Terms
Ensure clarity on rates liability, particularly for new tenancies commencing around the revaluation date. Consider whether lease incentives may need adjustment.
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Optimize Vacant Property Strategies
With potential empty property relief reform, ensure void management plans are robust. Evaluate beneficial occupation solutions for medium-term voids (3-12 months).
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Budget for Multiple Scenarios
Create financial models for optimistic, realistic, and challenging rate increase scenarios. Factor in potential relief changes and multiplier adjustments.
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Prepare Challenge Evidence
Gather rental evidence and property information to support potential VOA challenges if revaluation outcomes are unfavorable. The Check, Challenge, Appeal process requires strong documentation.
Q2 2026 (Post-Budget): Response Actions
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Immediate Impact Assessment
Analyze actual Budget announcements against predictions. Recalculate exposure across portfolio based on confirmed policy changes.
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Relief Maximization
Ensure all eligible properties claim available reliefs. This may include retail relief, small business rate relief, transitional relief, and any new sector-specific support.
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Strategic Void Management
For vacant properties, implement approved beneficial occupation solutions if empty property relief periods are shortened or rates liability increases.
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Tenant Communication
Proactively communicate with tenants about revaluation impacts and available reliefs. For tenant-liable properties, provide supporting information and guidance.
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Challenge Preparation
Lodge challenges promptly for any rateable values considered excessive. Rating surveyors should be engaged early in the Check process.
Why Future-Proof Solutions Matter Now
Regardless of which specific reforms are implemented, one trend is clear: business rates are becoming more complex, with more frequent changes, sector-specific variations, and enhanced scrutiny of reliefs and exemptions.
VacatAd's Position in the Evolving Landscape
VacatAd's technology-driven beneficial occupation model is designed to be robust across various policy scenarios:
- Shorter Empty Property Relief: Makes the gap between relief ending and securing a new tenant more costly – VacatAd provides a cost-effective bridge
- Stricter Relief Eligibility: VacatAd's legitimate occupation model satisfies legal beneficial occupation requirements without reliance on relief periods
- More Frequent Revaluations: Three-year cycles increase importance of controlling void costs during each cycle – VacatAd provides consistent savings
- Anti-Avoidance Measures: VacatAd's fully compliant, technology-monitored approach is designed to meet highest scrutiny standards
As we've seen in previous articles, VacatAd clients typically achieve 50%+ savings on business rates for vacant properties compared to paying full rates. With the 2026 revaluation likely to increase rateable values by 7-12% on average, that saving becomes even more significant:
Worked Example: Medium-Term Void (9 Months)
Property: Industrial warehouse, current RV £60,000, projected 2026 RV £66,000
Scenario: Tenant vacates April 2026, new tenant found January 2027 (9-month void)
| Approach | Rates Liability | Other Costs | Total 9-Month Cost |
|---|---|---|---|
| Traditional Management | £19,470 (6 months at full rates) 3-month industrial relief, then £32,340 annual rate ÷ 2 |
£8,100 Security, insurance, utilities, maintenance |
£27,570 |
| VacatAd Solution | £9,735 (50% saving) Beneficial occupation established Month 3 |
£3,200 VacatAd monitoring replaces multiple services |
£12,935 |
| Total Saving with VacatAd | £14,635 | ||
Post-2026 revaluation figures. Assumes industrial empty property relief of 3 months, new RV of £66,000, standard multiplier 49%.
The 2026 Budget Timeline: Key Dates
Based on historical precedent and government statements, here's the expected timeline:
- February 2026: Pre-Budget speculation and industry consultations intensify
- Early-Mid March 2026: Spring Budget announcement (typically second or third Wednesday of March)
- Late March 2026: Finance Bill published with detailed policy provisions
- 1st April 2026: Revaluation takes effect; new rateable values applied
- April-May 2026: VOA issues revised rateable value certificates; bills calculated with transitional relief
- June 2026 onwards: Check, Challenge, Appeal process opens for 2026 revaluation disputes
Critical Window: The 6-8 weeks between Budget announcement and revaluation implementation is when landlords must move quickly to optimize positions, claim reliefs, and implement void management strategies.
Expert Perspectives
"The direction of travel is clear: more frequent valuations, sector-specific support for retail and hospitality, and increased scrutiny of empty property reliefs. Landlords who prepare for this new paradigm now will be significantly better positioned than those who wait for the Budget."
— British Property Federation, Policy Briefing 2025
"We expect the 2026 Budget to maintain the government's balancing act: supporting high streets without decimating revenue from industrial and logistics sectors. The challenge for policymakers is implementing meaningful reform without creating new inequities."
— Gerald Eve, Business Rates Forecast 2026
Conclusion: Preparation Beats Reaction
While we can't predict every element of the 2026 Spring Budget, the broad direction is becoming clearer: more frequent revaluations, sector differentiation, enhanced scrutiny of reliefs, and continued high rates liability for vacant properties.
For commercial landlords, the strategic imperative is to:
- Model multiple scenarios and prepare for various policy outcomes
- Ensure robust void management strategies that don't rely solely on empty property relief
- Stay informed about policy developments and be ready to act quickly post-Budget
- Maximize all available reliefs while maintaining full compliance
- Consider future-proof solutions that remain effective across different policy environments
The business rates landscape of 2026-2030 will likely be more dynamic and complex than the previous decade. Landlords who adapt proactively will find opportunities where others see only challenges.
Prepare Your Portfolio for 2026 Changes
VacatAd's beneficial occupation solution provides certainty in an uncertain policy environment. Whether empty property relief is reformed or revaluation increases your exposure, our technology-driven approach delivers consistent 50%+ savings on vacant property rates.
Get ahead of the 2026 revaluation: Contact our team for a portfolio assessment and strategic planning consultation.