Spring Budget 2025 – Business Rates Shake-Up and the Case for Strategic Occupation
The UK Government’s Spring Budget 2025 has introduced a series of measures and updates that will significantly impact business rates and the way commercial properties are occupied. In an economic climate where many high streets and office blocks are struggling with vacancies, the Chancellor’s latest announcements have put a spotlight on non-domestic (business) rates, relief schemes, and empty property taxation.
This post breaks down the key budget changes affecting commercial landlords and occupiers – from updated reliefs to tougher empty property rules – and explains why, in this evolving landscape, VacatAd’s services are more relevant than ever. Property owners, landlords, commercial agents and facilities managers will find a clear analysis of the Spring Budget measures and what they mean for managing business rates liabilities in 2025.
Key Business Rates Changes in Spring Budget 2025
The Spring Budget 2025 continues the government’s commitment to reforming the business rates system. While major structural reforms are still on the horizon, several immediate changes and confirmations in this budget will affect how much business rate taxpayers owe and what reliefs they can claim:
Retail, Hospitality and Leisure (RHL) Relief Tapered: The budget confirms that the temporary RHL Relief, introduced to support high street businesses in recent years, will continue into 2025/26 but at a reduced level. Eligible occupied retail, hospitality and leisure properties will receive 40% off their business rates bills (up to a £110,000 cap) for 2025/26 (Business rates reform: Autumn Budget 2024 | Tax Adviser) ( Business Rates Relief: 2025/26 Retail, Hospitality and Leisure Scheme - GOV.UK ). This is a drop from the 75% relief available in 2024/25 ( Business Rates Relief: 2024/25 Retail, Hospitality and Leisure Scheme - GOV.UK ), indicating that government support for these sectors is tapering down as the economy normalises. RHL businesses therefore need to budget for a larger rates bill (60% of the normal charge, versus only 25% last year).
Multiplier Freeze for Small Businesses: To further support smaller properties and the high street, the Chancellor has frozen the small business rates multiplier for 2025/26 (Autumn Budget 2024: Business Rates | Mills & Reeve). Freezing the multiplier (the rate in the pound used to calculate rates bills) helps limit increases in bills that would otherwise occur due to inflation. This move keeps bills more manageable for smaller firms. (It’s worth noting that larger properties above certain rateable values may not enjoy this freeze and could even see higher multipliers in future as part of a rebalancing – more on that below.)
Future Reforms on the Horizon: Importantly, the Spring Budget reiterated a commitment to overhaul the business rates system to better support the high street and drive investment (Spring Statement 2025: On-the-day factual briefing | Local Government Association). An interim report on business rates reform is expected in summer 2025, with more detailed policy changes to be unveiled by the Autumn Budget 2025 (Spring Statement 2025: On-the-day factual briefing | Local Government Association). Among the ideas being discussed are permanently lower tax rates for smaller businesses and high-street properties, funded by higher rates for large “online” warehouses, as well as more frequent property revaluations and digitalising the system (Business rates reform: Autumn Budget 2024 | Tax Adviser). While these longer-term reforms won’t kick in immediately, the direction of travel is clear – the system is aiming to become fairer and more responsive, albeit within the constraint that it must still raise the same revenue overall (Business rates reform: Autumn Budget 2024 | Tax Adviser). For now, though, property owners must navigate the current rules, including some recent changes that have already come into effect from last year’s budget.
The 92-Day Occupation Rule for Empty Properties
Perhaps the most significant change affecting commercial landlords is the new empty property rates rule that took effect from 1 April 2024 (as a result of last year’s Spring Budget) and continues to shape 2025. Business premises must now be re-occupied for at least 13 weeks (around 92 days) in order to qualify for a fresh period of empty property rates relief (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). Previously, a short occupation of just 6 weeks was sufficient to reset the clock.
This rule matters because of how empty property rates relief works. When a commercial property becomes vacant, landlords are usually exempt from business rates for an initial period – generally 3 months for offices/shops and 6 months for industrial/warehouse properties (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). After that, full rates become payable even while the property lies empty. Under the old rules, if the landlord could secure any tenant or occupation for at least six weeks, that short occupation would “reset” the relief – effectively granting a further 3 or 6 month exemption once the property was empty again (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). Many savvy landlords engaged in this practice of intermittent short lettings to continually refresh their relief.
The government saw this “6-week relief reset” tactic – often dubbed “box shifting” – as an abuse of the system and moved to clamp down on it (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). Companies would take short-term lets of vacant properties, sometimes just storing nominal items (hence “boxes”), to help the owner avoid empty rates (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). Now, however, the bar has been raised: an empty property must be occupied for at least 13 weeks before the owner can claim a new cycle of empty property relief (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). In other words, a landlord has to bear at least three months of rates payments (or have a tenant pay them) before earning another rates-free period. This 92-day occupation threshold aims to discourage repetitive short-term occupancy arrangements purely for tax mitigation.
From a landlord’s perspective, this is a game-changer. The traditional quick fix of a token 6-week tenancy to cut your losses is no longer available. Intermittent occupation schemes now require a much longer commitment, which can be harder to arrange and may reduce the appeal of pop-up shops or short-term licenses. Indeed, there are concerns in the retail sector that this change could deter landlords from offering space to pop-up operators (who typically want shorter stints), potentially removing the vibrancy these temporary shops bring (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). The intention was to curb avoidance, but it may also mean some space stays empty longer if landlords hold out for a tenant willing to take at least a 3-month lease.
Empty Property Taxation – Pressure on Landlords
By extending the required occupation period to 13 weeks, the government is effectively tightening what some call the “empty property tax.” Landlords already grappling with high vacancy rates now face the prospect of paying full business rates on empty properties for longer periods of time, unless they can secure qualifying occupiers. This change “will significantly add to the financial burden on landlords already facing a multitude of pressures,” as one real estate law analysis noted (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). Those pressures include an uncertain economic environment in which tenants are struggling: a planned increase in the business rates multiplier (linked to inflation) in April 2024 was forecast to push more tenants into insolvency, resulting in even more empty commercial properties (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). In short, many landlords may find themselves with no tenant, no rental income, and now a hefty rates bill to pay with fewer ways to lighten the load.
It’s not just retail high streets feeling the pinch. Office and industrial landlords too are seeing cost challenges. Business rates have become a significant problem alongside other costs for property owners and occupiers, contributing to older offices being closed or even demolished in some cases (Q4 2024 RICS UK Commercial Propety Monitor.indd). When properties go vacant, owners must quickly decide whether to shoulder the ongoing rates or seek some form of relief. With the new 92-day rule, some may attempt to avoid the tax by holding properties vacant longer (waiting for a suitable tenant) rather than engaging in short lettings that don’t meet the threshold. Others might explore more creative solutions to mitigate empty rates within the law. This is where expert help becomes crucial.
Maximising Reliefs and Navigating New Rules
Despite the challenges, the current policy landscape isn’t all doom and gloom – there are still opportunities to maximise business rates reliefs and strategies to manage liabilities, if one is proactive and well-advised. The Spring Budget 2025 and recent reforms offer a mix of sticks and carrots for ratepayers:
Take Advantage of Available Relief Schemes: Make sure you are claiming all eligible reliefs. For example, small properties might qualify for Small Business Rate Relief, which can reduce or eliminate the rates bill if the rateable value is below certain thresholds. Likewise, if your property is in retail, hospitality or leisure use, claim the 40% RHL Relief for 2025/26 (Business rates reform: Autumn Budget 2024 | Tax Adviser) – it’s automatically applied by councils but ensure it’s reflected in your bill. There’s also an Improvement Relief in place (introduced in 2023) which means if you’ve made qualifying improvements to your property (such as expansions or upgrades), the resultant increase in rateable value can be ignored for up to 12 months – effectively delaying a higher bill and encouraging investment. And if your property is listed or in a specific Enterprise Zone, additional reliefs or exemptions might apply. In short, now is the time to audit your portfolio for any and all reliefs available.
Plan Vacant Periods Strategically: With the 13-week occupation rule now in force, property owners need to be more strategic about how they handle vacancies. If you know a property might be empty for an extended period, consider arranging a short-term occupation that lasts at least 3 months to reset the relief clock. This could be through a flexible lease or license to a business that needs temporary space, or even partnering with a charity or community organisation to use the space (charitable use can confer 80% relief in itself, and still count as occupied). The key is to plan these occupancies carefully so they meet the new threshold and serve a real purpose. The days of shuffling empty boxes in a warehouse for six weeks are over – any interim use now needs to be a bit more substantive and sustained.
Monitor Revaluations and Appeals: Business property values were revalued in 2023, and the next revaluation is slated for 2026 under the new three-year cycle. However, the government signalled it may increase the frequency of revaluations, possibly moving to annual revaluations in the future to keep rates more aligned with current market conditions (Business rates reform: Autumn Budget 2024 | Tax Adviser). Stay on top of your properties’ rateable values – if you believe a valuation is too high (for instance, if the local market has declined or the property has downsides not accounted for), consider lodging a challenge through the “Check, Challenge, Appeal” system. Also note any physical changes to the property or its locale that might warrant a reassessment. A lower rateable value will mean a lower bill each year going forward.
Prepare for Compliance Changes: The government is looking at modernising rates administration by 2028, including a potential “duty to notify” system requiring ratepayers to report changes (like occupancy status) more promptly (Business rates reform: Autumn Budget 2024 | Tax Adviser). This goes hand-in-hand with possible anti-avoidance measures such as a General Anti-Avoidance Rule for business rates (Autumn Budget 2024: Business Rates | Mills & Reeve). Landlords and agents should be prepared for closer scrutiny of relief claims and occupancy patterns. In practice, this means ensuring that any relief or exemption you claim is solidly justified and documented. Using legitimate strategies (such as genuine short-term occupiers or charitable lets) is fine, but everything should be above board because councils will have more tools to clamp down on abuse.
In summary, property owners can still minimise their business rates burden by being proactive – claiming the reliefs they’re entitled to, structuring leases or licenses smartly, and complying with the new rules. It has become a more complex playing field, which is why expert advice is invaluable in identifying the best course of action for each property.
Why VacatAd’s Services Are More Relevant Than Ever
With the Spring Budget 2025 reinforcing these changes, VacatAd finds its mission – helping clients reduce their business rates through strategic temporary occupation – more critical than ever. In this new landscape, landlords and property managers are facing a perfect storm: higher holding costs on empty properties, reduced government relief support, and stricter rules around how reliefs can be claimed. VacatAd specializes in navigating this storm on your behalf.
Our team at VacatAd has deep expertise in the business rates field, and we’ve adapted quickly to the 92-day occupation rule. We arrange compliant, meaningful short-term occupations of vacant commercial space that satisfy the 13-week requirement, resetting your empty property relief in a lawful manner (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley). This isn’t about loopholes or gimmicks – it’s about finding win-win temporary uses for your property that both mitigate your rates bill and bring some activity to an otherwise idle space. Whether it’s coordinating with pop-up retail operators, seasonal businesses, or community initiatives, we ensure that the occupation is genuine and beneficial, keeping you on the right side of HM Treasury’s anti-avoidance intentions (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords. | Real Estate Law Blog | Kingsley Napley).
Beyond the empty rates reset, VacatAd also advises on maximising other reliefs. Unsure if your property qualifies for a specific relief or exemption? We can conduct a thorough audit and handle the application process. Overwhelmed by the prospect of dealing with council billing departments or the paperwork for temporary lets? We take that burden off your shoulders. The Spring Budget’s message was clear: business rates are evolving, and only those who proactively manage their liabilities will avoid unnecessary costs. VacatAd serves as your partner in this process, keeping you ahead of changes. As one of the specialist companies in this niche, we understand the fine print of rating law and the practical steps needed to achieve savings for our clients, ethically and effectively.
Crucially, our approach recognises the financial pressures you’re under. Every month that a commercial unit lies empty is a hit to your bottom line – and now, with longer mandatory occupation periods, the stakes are even higher. VacatAd’s strategic interventions can mean the difference between a property remaining a monthly expense vs. becoming a breakeven or even revenue-generating asset while you search for a long-term tenant. By engaging us, landlords can relieve themselves of the stress of mounting business rate bills on voids, and occupiers (like retailers who only need short-term space) can benefit from flexible arrangements. It’s a solution that creates value on both ends.
Conclusion
In conclusion, the Spring Budget 2025 has brought significant changes to business rates that property stakeholders cannot afford to ignore. From scaled-back reliefs for high street businesses to tougher rules on empty property exemptions, the cost of holding commercial property is set to rise for many. Landlords and occupiers must respond by staying informed and being strategic. The current policy landscape – with its higher occupation threshold and upcoming reforms – truly makes professional guidance invaluable in minimising costs. VacatAd Ltd. is here to help you navigate these changes and seize any available savings.
