Business Rates - Autumn Budget
At the Autumn Budget the government set out the initial measures to reform the business rates system. For several years, the Labour Party has targeted business rates as a tax in need of major reform and in their election manifesto, Labour stated:
“The current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets. In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way”.
The measures announced to date fall short of the proposed comprehensive reform. The current rates system remains largely intact and will continue to generate the same revenue. The main substantive change is the proposed cut to the level of the UBR which will benefit the retail sector from 2026-27 onwards.
With the cost of the cut however being financed by properties with RV of £500,000, it could well be that retailers occupying some of the larger stores on the High Street will face higher rates bills as a result.
Initial Measures announced at the Autumn Budget
Uniform Business Rate (UBR) – Effective 2026/27 onwards
- Starting April 2026, the Government will implement a permanently lower UBR for retail, hospitality and leisure (RHL) properties with a Rateable Value (RV) below £500,000.
- To focus support on smaller RHL properties, the greatest UBR reduction will apply to properties with a RV under £51,000.
- There will be a smaller cut in the UBR for RHL properties with RV’s between £51,000 and £500,000..
- The levels of the reduced UBR’s will be announced at the 2025 Autumn Budget and will take into account the projected impact of the 2026 Rating Revaluation.
- The cost of these cuts will be covered by raising the UBR on properties with RV of £500,000 or more “which includes the majority of large distribution warehouses including those used by online giants”.
- The Government have yet to confirm the eligibility criteria as to which properties in the Retail, Hospitality and Leisure sectors will be benefit from the proposed UBR cut
Retail Rates Relief to end
The retail rates relief scheme which has been in place since 2020/21 is to end. The final year of rates relief for RHL properties will be in 2025/26 where the Government will provide a reduced 40% relief to RHL businesses on their rates bills, up to a cash cap of £110,000 per business.
2025/26 UBR
• The UBR for properties with RV less than £51,000 is to be frozen at 49.9p
• The UBR for properties with RV of £51,000 and above is to be increased to 55.5p
Other measures
- Removing charitable rate relief from private schools – From 1st April 2025, private schools in England will no longer be eligible for charitable rate relief.
- Business Rates Reform Discussion paper - Published on budget day, the paper outlines potential future reforms, including:
- Property improvements – a review of aspects of the rates system which create a barrier to making improvements
- Tackling avoidance and evasion – the Government is to publish a consultation on adopting a “General Anti Avoidance Rule” for business rates in England
- Making the system more responsive - An assessment of the costs and benefits of increasing the frequency of rating revaluations and reducing the current two-year gap between the valuation date and the effective date of a revaluation
- Disclosure Consultation - Summary of Responses – On the day of the budget the Valuation Office published a response to the March 2023 Consultation on Disclosure. In this response the VOA announced a three-year delay in the proposed plans to increase transparency in business rates valuations by providing the rental evidence used to set Rateable Values. This is to be put back from 2026 to 2029 and linked to this, the new information duty will also be delayed and rollout will only now commence after April 2026. The information duty will only be formally activated and mandated for all by 1st April 2029.