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What is of overwhelming commercial significance in determining the amount of rates payable by each ratepayer is the rateable value of the unit of property concerned and the multiplier (expressed as p in the £ of rateable value) which is applied to that rateable value.
Wednesday’s budget comes at that critical point in the rating cycle when valuations are being revisited for the period from 1 April 2026 to 31 March 2029 and significant reforms enable government to make radical change to the range of multipliers. There will be winners, but also some substantial losers.
The Sunday Times reports that retailers have warned that they will be forced to raise prices and may have to close up to 400 stores if they are hit with higher costs next year. Helen Dickinson, chief executive of the British Retail Consortium (BRC), said:
“Retailers cannot absorb further costs, and new taxes will simply push up the cost of food and other essentials.”
Supermarkets have made a last-ditch plea for the Treasury to exempt them from the top band of business rates after food inflation shot up in October.
With effect from 1 April 2026, the government plans to introduce a new top band for larger commercial properties with a rateable value of more than £500,000, while giving a permanent discount to smaller retail, leisure and hospitality businesses. The actual rates that companies will be hit with have not yet been announced.
The BRC has claimed that about 400 stores would be at risk of closure if they are hit with the highest level of business rates next year, and have called for an exemption.
“Given this would not cost the Treasury a penny, it should be one of the easier decisions the chancellor gets to make,”
Dickinson said.
Wholesalers have argued that they should also benefit from the higher-rate exemption, saying that to do otherwise would be anti-competitive and push up prices for the businesses and public sector organisations they supply, such as schools and hospitals. Some wholesalers have threatened to seek a judicial review if Reeves follows through with an exemption for supermarkets.
Non-Domestic Rating (Multipliers and Private Schools) Act 2025
The above Act which was passed earlier this year enables a new distribution of multipliers. This new distribution will benefit the retail, hospitality and leisure sectors and also occupiers of lower value premises whilst a new high rate band will hurt ratepayers with premises having a rateable value above £ 500,000. The values to which the multipliers are applied are a matter for valuation judgment.
Government’s intent
At the Autumn Budget on 30 October 2024 the government announced an intention to introduce:
- permanently lower multipliers for qualifying retail, hospitality and leisure properties under £500,000 rateable value from April 2026/27,
- an intention to fund this sustainably by introducing higher multipliers on properties with rateable value £500,000 or more, which includes the majority of large distribution warehouses including those used by online giants,
- support for qualifying retail, hospitality and leisure properties in the interim period leading up to the new permanent multipliers by providing 40% relief to such businesses on their business rates in 2025/26, up to a cash cap of £110,000 per business (delivered using existing legislation), and
- protection of the smallest properties by freezing the small business multiplier in 2025/26, protecting over a million properties from inflationary bill increases (delivered using existing legislation).
Intent implemented
The Non-Domestic Rating (Multipliers and Private Schools) Act 2025 received Royal Assent on 3 April 2025. The Act creates powers to enable the introduction of additional multipliers:
- new lower multipliers for qualifying retail, hospitality and leisure hereditaments,
- new higher multipliers for hereditaments with a rateable value of £500,000 or more.
The Treasury now has a power to:
- introduce multipliers which are higher than the non-domestic rating multiplier for that year but not more than 10p higher than the non-domestic rating multiplier
- make provision for additional multipliers which are lower than the non-domestic rating multiplier for that year but not more than 20p in the pound below the small business non-domestic rating multiplier.
Where are we now?
Prior to the changes made by this Act coming into effect from 1 April 2026, in England there are two non-domestic rating multipliers – the non-domestic rating multiplier and the small business non-domestic rating multiplier. The non-domestic rating multiplier is applicable to hereditaments with a rateable value of £51,000 and above and, for 2024/25, is set at 0.546. The small business non-domestic rating multiplier is applicable to hereditaments with a rateable value of £50,999 and under and, for 2024/25, is set at 0.499. This Act enables the introduction of new additional multipliers from April 2026.
There are many businesses occupying premises with a rateable value in excess of £500,000 including professional service firms.
The government’s position is that any tax cut must be sustainably funded. For that reason, the Act enables the introduction of higher multipliers, which can be applied only to the most valuable properties—those with a rateable value of £500,000 and above, which represents less than 1% of all properties in England. The rates for any new multipliers will be set in the 2025 autumn Budget in the light of the outcomes of the 2026 revaluation.
What to look out for on Wednesday
Our checklist for Wednesday’s budget statement features:
- the promised announcement of the new multipliers
- expect some good news with the new top rate being below the now permitted maximum and the standard rate also being moderated
- look out also for some industry specific reliefs
- be mindful that the draft rating lists with the rateable values that will apply to all rateable properties from 1 April 2026 will be published early next month. Expect some significant increases leaving ratepayers worse off as current multiplier times current rateable value turns to be less than new multiplier times RV in draft 2026 list for many.
If you have any questions about the areas covered in this article or need further advice, then please contact one of our expert Real Estate Dispute Resolution solicitors by email or call +44 (0)3333 231 580.
