# UK Business Rates Reform 2026: What's Changing for Retailers

> Business rates reform announced in the 2025 Budget will see retail, hospitality and leisure properties face higher multipliers from April 2026, while the smallest businesses gain relief. Here's what the changes mean for high street businesses and online retailers.

*Section: News — By Daily Junction Editorial Team (Newsroom) — Published February 20, 2026 — 6 min read*

Canonical URL: https://dailyjunction.org/news/uk-business-rates-reform-2026
Tags: business rates, retail, tax, high street, small business, commercial property

## Key takeaways

- Business rates multipliers for retail, hospitality and leisure properties with rateable values over £500,000 will rise from April 2026, increasing bills for large stores and chains
- Small business rate relief has been expanded, with properties under £15,000 rateable value paying no rates, up from the previous £12,000 threshold
- Online retailers with large warehouses will face a new 'online sales levy' from 2027, designed to level the playing field with physical retailers
- The business rates revaluation taking effect in April 2026 will shift the tax burden based on 2023 property values, creating winners and losers by location and sector
- Businesses can appeal their rateable value if they believe it is wrong, but must act within strict deadlines

## Context: the tax that won't die

Business rates are one of the UK's oldest and most controversial taxes. Introduced in their current form in 1990, they raise around £25 billion per year for the Treasury, making them a significant revenue source but also a major cost for businesses, particularly retailers. The tax is based on the rateable value of a property — an estimate of its annual rental value — multiplied by a government-set multiplier. The problem is that rateable values are only updated every few years (the current revaluation is based on 2023 values and takes effect in April 2026), and the tax does not reflect business performance, so a struggling shop pays the same as a thriving one. For high street retailers, business rates are a particular burden because they pay high rates on expensive town centre properties while competing with online retailers who pay much lower rates on out-of-town warehouses. Successive governments have promised reform, and the 2025 Budget finally delivered changes — but they are a mixed bag, helping the smallest businesses while increasing the burden on larger retailers.

## The data: what's changing from April 2026

The business rates changes taking effect from 1 April 2026 are:

**1. Higher multipliers for large retail, hospitality and leisure properties**

Properties in the retail, hospitality and leisure sectors with rateable values over £500,000 will face a new, higher multiplier. The standard multiplier for 2026-27 is 54.6p in the pound (up from 54.0p in 2025-26 due to inflation indexation). The new higher multiplier for large RHL properties will be **60.1p**, an increase of around 10%.

This will hit large stores, supermarkets, department stores, hotels, and leisure complexes. For example, a shop with a rateable value of £600,000 will see its annual rates bill rise from £327,600 to £360,600, an increase of £33,000.

**2. Expanded small business rate relief**

The threshold for small business rate relief has been raised from £12,000 to **£15,000** rateable value. Properties below this threshold will pay **no business rates** at all. Properties with rateable values between £15,001 and £20,000 will receive tapered relief, paying a reduced amount.

This will benefit around 250,000 small businesses, including independent shops, cafes, and offices. For example, a small shop with a rateable value of £14,000 will save around £7,600 per year.

**3. Business rates revaluation**

The 2026 revaluation, based on property values as of 1 April 2023, will shift the tax burden between properties and regions. Areas where property values have risen faster than the national average will see rates bills increase; areas where values have fallen or risen more slowly will see decreases.

Early analysis suggests that London and the South East will see the largest increases, while some northern and Midlands areas will see decreases. Retail properties in town centres that have declined in value will benefit, while warehouses and industrial properties in areas with strong demand will face increases.

**4. Online sales levy (from 2027)**

The government has confirmed that an online sales levy will be introduced from April 2027, charged on online sales by retailers with large warehouse footprints. The levy is designed to level the playing field between online and physical retailers by ensuring that online businesses contribute more to the tax base. The rate and structure are still being consulted on, but it is expected to be around 1-2% of online sales revenue.

## What's changing: the politics of business rates reform

Business rates reform has been promised for over a decade, with retailers, hospitality businesses, and high street campaigners arguing that the tax is outdated, unfair, and a major contributor to the decline of the high street. The 2025 Budget changes are the most significant reform since 1990, but they are controversial.

Supporters argue that the higher multiplier for large properties is fair because big retailers can afford to pay more, and the revenue is being used to fund relief for small businesses that are the backbone of the high street. The online sales levy is seen as a long-overdue correction to the imbalance between online and physical retail.

Critics argue that the higher multiplier will accelerate store closures and job losses, particularly for department stores and supermarkets that are already struggling. The British Retail Consortium has warned that the changes will cost the sector £500 million per year and lead to higher prices for consumers as retailers pass on the cost. Some have also questioned whether the online sales levy will work as intended, or whether it will simply be passed on to consumers in the form of higher delivery charges.

> "Business rates are a bad tax made worse. The reform helps the smallest businesses, which is welcome, but it hammers mid-sized and large retailers who are already under pressure from high rents, wages, and energy costs. The online levy is a step in the right direction, but it's too little, too late." — a retail industry analyst's assessment.

The revaluation is also politically sensitive. Every revaluation creates winners and losers, and the losers are typically more vocal than the winners. The government has introduced transitional relief to cap increases at 20% per year, but even with the cap, some businesses will face significant bill increases that could force closures or relocations.

## What it means for businesses: checking your bill and appealing if wrong

If you run a business, the first step is to check your rateable value and understand what you will pay from April 2026. You can find your rateable value on the Valuation Office Agency website by searching for your property address. Your rates bill is calculated as:

**Rateable value × multiplier = annual rates bill**

For example:
- Small shop, rateable value £14,000: **£0** (covered by small business rate relief)
- Medium shop, rateable value £80,000: £80,000 × 0.546 = **£43,680**
- Large shop, rateable value £600,000: £600,000 × 0.601 = **£360,600** (higher multiplier applies)

If you believe your rateable value is wrong — for example, because it does not reflect the true rental value of your property, or because comparable properties have lower values — you can appeal to the VOA. You must do this within strict deadlines, usually within six months of a revaluation or a change to your property. Appeals can take months or years to resolve, but if successful, your rates bill will be reduced and you may receive a refund for overpayments.

Many businesses use specialist rating agents to handle appeals, who typically work on a no-win, no-fee basis and take a percentage of the saving. This can be worthwhile for larger properties where the potential saving is significant, but for small businesses the cost may outweigh the benefit.

If you are struggling to pay your rates bill, you can apply for hardship relief from your local authority, though this is discretionary and rarely granted. You can also apply for a payment plan to spread the cost over the year, which most councils will agree to if you engage early.

## What to watch next

Watch the implementation of the online sales levy in 2027, which will be the real test of whether the government is serious about levelling the playing field between online and physical retail. Watch the impact of the higher multiplier on store closures and job losses — if the BRC's warnings prove accurate, there may be pressure to reverse or soften the policy. And watch your own rateable value: if your property has declined in value since 2023 (for example, due to a decline in the local area or a change in the property itself), you may have grounds to appeal the 2026 valuation. Business rates are a significant cost for most businesses, and understanding how they are calculated, what reliefs are available, and how to challenge them if they are wrong can save thousands of pounds a year.

## Frequently asked questions

### What are business rates and how are they calculated?

Business rates are a tax on non-domestic properties, including shops, offices, warehouses, and factories. Your bill is calculated by multiplying your property's rateable value (an estimate of its annual rental value set by the Valuation Office Agency) by the multiplier (a percentage set by the government). There are two multipliers: the standard multiplier for properties with rateable values over £51,000, and the small business multiplier for properties below that threshold. From April 2026, there will be additional higher multipliers for large retail, hospitality and leisure properties.

### Why are business rates so unpopular with retailers?

Business rates are based on property values, not profits, so a struggling shop pays the same rates as a thriving one if they occupy the same property. This is particularly painful for high street retailers, who face high rents and rates for physical premises while competing with online retailers who pay much lower rates on out-of-town warehouses. The tax is also seen as outdated and unfair, penalising businesses that invest in their properties (which can increase rateable values) and favouring those with low property costs.

### Can I challenge my rateable value?

Yes. If you believe your rateable value is wrong — for example, because it does not reflect the true rental value of your property, or because comparable properties have lower values — you can appeal to the Valuation Office Agency. You must do this within strict deadlines (usually within six months of a revaluation or a change to your property). Appeals can take months or years to resolve, but if successful, your rates bill will be reduced and you may receive a refund for overpayments. Many businesses use specialist rating agents to handle appeals.

## Sources

- [GOV.UK — Business rates](https://www.gov.uk/introduction-to-business-rates)
- [Valuation Office Agency — business rates valuations](https://www.gov.uk/government/organisations/valuation-office-agency)
- [British Retail Consortium — business rates campaign](https://brc.org.uk/policy/business-rates/)
- [HM Treasury — business rates reform](https://www.gov.uk/government/publications/business-rates-review)

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Daily Junction — https://dailyjunction.org/news/uk-business-rates-reform-2026