2025/26 Business Rates: Key changes and outlook
After a relatively quiet start to the year, albeit with the introduction of the new Improvement Relief and adjustments to the empty rate rules, the Autumn Budget in England provided the Government in Westminster with an opportunity to outline their plans for the business rates system. This was soon followed by the draft Scottish and Welsh Budgets, each adding to the fiscal narrative across the UK. Here is an overview of the latest changes impacting your business rates for the upcoming rate year and a look at what is on the horizon.
Outlook
Reflecting a shift from the earlier radical calls to scrap business rates, England’s Labour Government introduced a more measured approach to business rates reform. Following the Government’s introduction of the Transforming Business Rates discussion paper, we published our review titled ‘Transforming Business Rates or Tinkering at the Margins’, where we delved into the proposals and the actual impact on businesses.
The paper sets out the Government’s key objectives of protecting the high street, encouraging investment and, creating a fairer system and proposes revised timelines for the ‘Duty to Inform’ reform that was legislated for in the Non-Domestic Rating Act 2023. It has been recognised that some of these measures, in particular improved transparency and the introduction of the new duty to inform for ratepayers, will need more time and some have been pushed back to as far as 2029.
However, some changes are more imminent and will impact ratepayers much more quickly — in particular, the introduction of new lower multipliers for qualifying retail, hospitality and leisure occupiers and higher multipliers for those occupying properties with larger assessments. This is already causing concern for some businesses who are now facing uncertainties when forecasting liabilities for 2026/27.
Since the proposals in the discussion paper drew considerable interest from businesses, HM Treasury has arranged meetings with various stakeholder groups to discuss further. We will provide feedback on these discussions when available in 2025.
Read Transforming Business Rates or Tinkering at the Margins.
Across the regions
England
There was good news for certain ratepayers with a freeze to the smaller multipliers in England for 2025/26, though the standard multiplier faces inflationary increases.
Furthermore, the Government also announced a reduced Retail, Hospitality and Leisure Relief scheme for 2025/26, decreasing the discount from 75% to 40%, but maintaining caps and subsidy controls.
The announcements in England came with the new proposals for lower multipliers from 2026 for retail, hospitality and leisure properties with assessments of below RV £500,000. This adjustment will be funded by higher multipliers for those with rateable values of £500,000 and above. More detail was included in The Non-Domestic Rating (Multipliers and Private Schools Bill) which is currently working its way through Parliament.
Read the full update on the UK Government Budget.
Scotland
Building on themes seen in England, the Scottish Budget also froze the basic multiplier, yet inflationary increases were applied to the intermediate and higher. Unlike its English counterpart, current proposals for the Scottish relief scheme are limited to hospitality only, accentuating regional disparities.
Read our full update on the Scottish Budget.
Wales
Unlike the freeze strategies in England and Scotland, the Welsh Draft Budget for 2025/26, confirmed a 1% increase to the non-domestic rates multiplier. Wales followed England’s lead with a similar Retail, Leisure and Hospitality Relief scheme, although it concludes on 31 March 2026 . Additional measures include the permanent relief of childcare premises.
Read our full update on the Welsh Budget.
Summary of UBRs and Reliefs
Final draft UBRs and a summary of key reliefs for 2025/26 are detailed in the table below. For a fuller list of reliefs, exemptions and supplements, please visit our data card:
On the horizon
Non-domestic Rating Changes for UK Private Schools
At the UK Budget, the Chancellor confirmed that the Government would follow through with their plans to remove charitable relief from most public schools from 1 April 2025. In addition to the parameters for the new multipliers, the Non-Domestic Rating (Multipliers and Private Schools Bill) legislates for this change. The move is expected to be completed before councils start to issue rate demands for the 2025/26 rate year. Read more.
General Anti Avoidance Rule
We are anticipating a new consultation on a General Anti Avoidance Rule originally announced before the election and follows the previous administration’s changes to the empty rate rules.
Looking further ahead to 2025, we expect the transformation process to pick up pace and we will keep you updated.
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