Despite being elected on a manifesto that promised to replace business rates with a fairer system, the Labour government’s first Budget merely contained a number of changes to the existing system many of which will result in businesses paying more than before. The key points from this year’s budget and what they mean for ratepayers are considered here.

• Retail, Hospitality and Leisure (RHL) Relief 
  The scheme continues for the new rate year (2025/26) and will provide 40% relief for eligible, occupied retail, hospitality and leisure properties, up to a cash cap limit of £110,000 per business. This has been reduced from the current 75% relief and will therefore mean substantial increases in business rates liabilities for large numbers of ratepayers in these sectors, many of whom continue to find trading conditions challenging in the current economic climate.

• Multipliers (Small Business and Standard)
  For 2025/26, the small business multiplier in England is to be frozen for a fifth consecutive year at 49.9p, which will be welcomed by small businesses and those businesses occupying properties with rateable values below £51,000. In contrast, the standard business multiplier will be increased in-line with the Consumer Price Index (CPI), which rose by 1.7% in the 12 months to September 2024. This equates to an increased standard multiplier of 55.5p, which is a record high and is not good news for any ratepayers with rateable values of £51,000 or more.

• Removing charitable rate relief from private schools
  As widely expected, private schools in England will no longer be eligible for 80% mandatory charitable rate relief. This change is intended to take effect from April 2025, subject to Parliamentary process and will mean a 400% increase in liability for those schools affected by this change.

• Permanently lower multipliers for retail, hospitality and leisure (RHL) Properties
  The government intends to introduce permanently lower multipliers for Retail, Hospitality and Leisure (RHL) properties from 2026/27, paid for by a higher multiplier for properties with rateable values above £500,000. Although on the face of it good news for ratepayers in the RHL sectors, it is unlikely the reduced multipliers will be as generous as the existing RHL relief scheme, Furthermore, any businesses outside the RHL sectors are likely to be hit with a multiplier even higher than the current record 55.5p announced for 2025/26.

• Business rates reform
  The government also announced its intention to create a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century.  A discussion paper has been published setting out potential areas of business rates reform, including increasing the frequency of revaluations and shortening the gap between the valuation date and the date new rateable values come into effect. 

• Tackling avoidance and evasion
  A consultation will also be published to consider whether measures introduced in April 2024 to reduce the avoidance of Empty Property Rates have been successful.  This raises the prospect of a further tightening of avoidance and evasion measures, which will impact many owners of vacant properties.

In summary, there is very little good news for ratepayers in this Budget with the majority of measures leading to increases in liability for most businesses. Even the permanently reduced multipliers for RHL properties from 2026/27 are unlikely to be as generous as the existing RHL scheme leaving very few ratepayers better off than they are now.

For a detailed analysis of your rateable value and general rating advice, contact the Business Rates team.