What’s Changing & When
- The Business Rates Retention System (BRRS) will be reset from 1 April 2026. The reset means updating how much business rates income each local authority is expected to collect. (gov.uk)
- Alongside the reset is a property revaluation in 2026 which updates rateable values (RVs), affecting bills. (gov.uk)
- Introduction of permanently lower multipliers for Retail, Hospitality & Leisure (RHL) properties with RVs under £500,000. Higher multipliers for properties above that threshold. (gov.uk)
Impact on Small Businesses
- Tax bills may fall for qualifying RHL businesses under £500,000 RV due to lower multipliers. Comforting for pubs, restaurants, shops. (gov.uk)
- But bills could increase or shift where local authorities lose income; those authorities may raise other rates or reduce services. Businesses in different areas might see large geographic variations. (gov.uk)
- Small Business Rate Relief, etc., will continue, but the structure of relief and multipliers will affect total liability. Planning for 2026-27 must account for both revaluation and multiplier structure. (gov.uk)
Implications for Local Authorities
- New baseline figures (BRBs) will be recalculated, and associated top-ups or tariffs adjusted per authority. (gov.uk)
- Authorities will receive Section 31 compensation from central government for loss in revenue when reliefs or lower multipliers reduce their income. (gov.uk)
- Some authorities may face sudden shifts in funding depending on RV changes and property mix. Must prepare transition funds and communication strategies for ratepayers. (gov.uk)
Planning & Actionable Steps
- Review your property’s rateable value: Check estimated RV under next valuation; see if your RHL status (< £500,000) applies so you qualify for favourable multiplier. If over, plan for higher rates.
- Budget forward to 2026-27: Include potential increases, not just for rates but secondary impacts (e.g. services, fees).
- Leverage reliefs: Use Improvement Reliefs or local incentives wherever possible to reduce tax burden. Monitor where small business relief applies. (gov.uk)
- Monitor Local Authority communications: Authorities will publish proposed BRBs, tariffs, and supplements well in advance. Engage in consultations if available.
Example Scenario
A small café in a high street with RV £200,000 currently paying under regular multiplier might benefit from a lower RHL multiplier from 2026-27. If the standard multiplier is 55.5p and RHL multiplier drops to, say, 45p, this could mean ~19% savings on rates, but offset by possible increases due to RV revaluation.
Key Takeaways
- The reset and multiplier reforms are high‐impact for RHL businesses and local authorities. Medium for non-RHL.
- Early planning (12-18 months ahead) can make a big difference.
- Stay informed via government consultations and draft local authority settlements.
- Advice from tax professionals valuable for forecasts and entity considerations.