Business rates reform in the Autumn Budget 2025.

The Autumn Budget brought one of the biggest shifts to business rates that we have seen in years. The government has set out a new structure that will apply from April 2026. The intention is simple on the surface. Smaller high street businesses will get some permanent breathing room, while the largest commercial properties will carry more of the load.

For anyone running or occupying commercial premises, these changes will affect planning, cash flow and renewal discussions. Here is what you need to know.

A new five-tier multiplier

The Budget replaces the old two-tier system with a five-tier set of multipliers. These are tied closely to both the type of business and the rateable value of the property.

At the lower end are retail, hospitality and leisure (RHL) properties with a modest rateable value. These will benefit from the lowest multipliers. Larger RHL properties still get a reduced rate but a smaller discount. Non-RHL properties sit in their own tiers, with higher multipliers. Above all of this sits a new high-value multiplier that applies once a property has a rateable value of £500,000 or more.

In practice, this means that a small shop, cafe or leisure business should see a genuine reduction in its business rates bill. Larger premises may see little change or, in some cases, an increase. Anything that crosses the £500,000 mark will now fall into the highest tax band, even if it is an entirely traditional bricks and mortar business.

The Budget also confirmed that the generous pandemic-era reliefs for RHL businesses will continue to be reduced. For 2026 and 2027, the relief available will fall again, which means that some businesses may feel a shift even if their multiplier goes down.

Transitional support and new reliefs

Because the 2026 revaluation will move many rateable values around, the government has put in place a pot of transitional relief which will operate for three years. This is designed to smooth out sharp increases, although it will not eliminate them entirely.

Another point that may interest landlords and mixed-use operators is the new ten-year, 100% relief for qualifying electric vehicle charging points. This may influence decisions about upgrades to forecourts, car parks or mixed commercial sites.

What does this mean for your business?

For many of our clients who operate in retail, hospitality or leisure, this Budget will be a welcome shift. Permanent lower multipliers give more certainty and help with forecasting. After years of temporary reliefs that were renewed year by year, businesses finally have something they can build into long term plans.

Smaller shops, independent cafes, restaurants and fitness or leisure operators are likely to feel the benefit most clearly. Landlords who own smaller high street units may also find that the reduced cost base helps tenants remain profitable, which in turn supports occupancy levels and rental stability.

There are also risks to be mindful of. Businesses with larger footprints or those located in high-value areas may be pushed into the top tier even if they are not large companies in practice. Warehouses, distribution hubs and large format retailers are especially exposed. A rate rise of a few pence in the pound can translate into a significant annual cost.

There is also a question of classification. Only properties that meet the statutory definition of retail, hospitality or leisure will qualify for the reduced multipliers. Some businesses that operate in hybrid or flexible formats may need advice to ensure they are being treated correctly.

Final thoughts

Between now and the start of the new system in April 2026, businesses have a window to take stock. The reforms will create winners and losers, but with early advice you can position yourself in the strongest way possible.