The government has announced significant reforms to the business rates system from 2026–27, and for many retail, hospitality, and leisure (RHL) businesses, the changes will be both welcome and long overdue. Below is a straightforward summary of what is coming, why it matters, and how it may affect your businesses.
Permanent Relief for High Street Businesses
Since the pandemic, RHL businesses have relied on temporary relief schemes renewed on an annual basis. These extensions offered short-term help but created long-term uncertainty; particularly for businesses trying to plan investments or renew leases.
From April 2026, these temporary arrangements will be replaced with permanently lower multipliers for RHL properties with rateable values under £500,000. These new, reduced tax rates will be set 5p below the national multipliers, giving businesses something they have not had since before the pandemic: predictability.
This reform is designed to provide stability to over 750,000 RHL properties and forms part of the government’s wider commitment to supporting high streets and in-person commerce.
A Higher Rate for the Most Valuable Properties
To fund the permanent reduction, the government will introduce a higher business rates multiplier for properties with a rateable value of £500,000 or more. This higher rate will sit 2.8p above the national standard multiplier.
According to government figures, just over 21,000 properties fall within this category; primarily large commercial buildings, including offices and distribution warehouses. Unsurprisingly, the majority are located in London and the South East, where property values tend to be higher.
A Rebalancing of the Burden
One of the government’s stated aims is to rebalance the business rates system so that it more fairly reflects how businesses operate today. In practice, this means shifting some of the burden away from property-intensive sectors, such as hospitality and high street retail, and towards larger distribution hubs, including those used by major online retailers.
According to government predictions, between 2026–27 and 2028–29:
- More than 35,000 pubs are expected to benefit from around £210 million in reduced bills;
- Nearly 30,000 restaurants should see savings totalling approximately £180 million; and
- Around 1,900 distribution warehouses are expected to contribute an additional £270 million.
The intention is clear: strengthen the high street by ensuring that those who benefit more from the digital economy contribute proportionately.
Part of a Wider £4.3bn Support Package
These multiplier changes sit alongside a broader support package worth £4.3 billion over three years, including:
- A redesigned transitional relief scheme to soften bill increases;
- An expanded small business support scheme; and
- Extended protection for small businesses acquiring a second property.
These measures will be particularly important following the 2026 revaluation, which will update rateable values across the country.
Looking Ahead
The government views these changes as a first step towards modernising the business rates system. A Call for Evidence has been launched to better understand how rates influence investment decisions, and further reforms are expected.
For now, the key takeaway for RHL businesses is that a more stable, supportive and predictable business rates environment is finally on the horizon.
For more information, please contact the Commercial Property Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.