Budget 2025: changes to business rates and industry reaction
The Chancellor Rachel Reeves laid out the Labour Party’s plans for the economy on Wednesday in the Government’s Autumn Budget.
Amongst the new measures to be introduced is a number of changes to business rates. From April 2026, new business rates multipliers, revised relief provisions, and new support schemes will apply to commercial properties in England.
The changes include:
New business rates multipliers
The Government will be replacing the current two-tier multiplier system with five different multipliers:
| Category | Multiplier |
| Small business | 43.2p |
| Standard multiplier | 48.0p |
| Small retail, hospitality, and leisure (RHL) | 38.2p |
| Standard RHL | 43.0p |
| High-value property multiplier (rental values of £500,000+) | 50.8p |
These changes mean, that for the first time, that RHL properties with a rental value of below £500,000 will benefit from permanently lower multipliers, rather than temporary relief.
Transitional relief caps
Annual increases in bills will be capped for three years, depending on their rateable value. These caps only apply to increases.
The Supporting Small Businesses (SBS) scheme
The SBS scheme from April will:
- Aim to protect smaller ratepayers from facing significant increases following revaluation
- Limit annual rates increases to £800 or the transitional percentage gap, whichever is higher
- Run for three years, with the 2023 scheme extended until 2026-27
The small business rates relief (SBRR) has also been extended, with the grace period increased from one to three years. Businesses expanding into an additional property will retain SBRR on their original premises.
Reaction
Reaction to the Budget has been mixed, with REVO chair Vivienne King warning the changes could lead to a “two-speed Britain”:
“Whilst today’s Budget offers badly needed clarity for the property sector, it also raises several new challenges, and falls short of providing the long-term support retail and leisure so urgently needs.
“We welcome the reduction in business rates below the £500,000 threshold, but the price paid by those not favoured with the discount is too high and undermines the declaration that the sector is being supported, raising serious concerns about the future viability of larger anchors. Given that many of these larger properties provide invaluable stewardship to drive footfall to smaller operators, this change introduces a worrying degree of risk for the sector.
“This, alongside further pressures now placed on household finances following a projected 3.5% rise in inflation this year and combined tax increases that will see record highs by 2030, adds another layer of uncertainty for occupiers, owners and investors as they await the outcome on consumer spending.
“The major cities will feel the blows and we will have to see how well they absorb it. But the smaller retail and leisure places, which were already facing massive structural challenges, are likely to feel the sharpest effects. Without thoughtful intervention, we risk accelerating a two-tier market between places still able to draw investment and those struggling to compete.”
John Webber, head of business rates at Colliers, said the Chancellor’s announcements concerning business rates constitute “a dismal day for UK PLC and the High Street”, adding:
“Whilst we are pleased to see that the cap on support for RHL operators has now been removed (previously £110,000 per business) we are concerned that the discount on the smaller multiplier is only 5p which is limited and may not offset the loss of reliefs these smaller shops and restaurants received previously, particularly if their RV rise as anticipated in the 2026 Revaluation”
“We are also disappointed that the government has continued with its plan that the funding for this reduction will be achieved by increasing the multiplier for larger properties—those with RVs of £500,000 and above—across all sectors. This will impact offices, large industrial and manufacturing units and larger retail sites among others- putting millions on their bills. This policy is also an attack on London and the Southeast. By its own admission, of the 21,000 properties paying the higher multiplier – 10,700 are in London and the Southeast.
“The government has also said that its policy is to target the large distribution warehouses, yet of the 21,000 businesses facing the higher multiplier only 1900 are distribution warehouses and a fraction are online retailers.
“By this action the government has effectively shifted the cost of this support from itself to UK plc, putting an even further strain on businesses across the board- and putting even further pressure on the high street since it is the big retail and leisure operators who provide anchor tenants, encourage footfall and create the jobs. Tesco, Asda and Sainsburys all have at least 90% of the properties in the higher multiplier range.
“Such increased costs are effectively a stealth tax and will only lead to food inflation. It will do nothing to stimulate investment and expansion.”
The Government has defended the changes, stating that the net impact “is a more level playing field, with measures designed to reduce costs for local businesses, unlock capital for growth and modernise the tax system to encourage investment.”