Retail Renaissance: Business rates - making the inequitable palatable
Political pledges and promises on business rates are clearly much easier to make in times of opposition. But tinkering isn’t the same as scrapping and to date, promises of meaningful reform haven't been honoured.
10 August 2026
3 key takeaways
The system is broken, with limited impetus for policy change.
Root and branch reform is needed, rather than superficial tinkering with multipliers and relief packages.
Retail and hospitality shoulder disproportionately high business rates.
The 1% of retail properties that cross the £500k RV threshold contribute 26% of rateable values, with Central London and supermarkets bearing the biggest brunt.
Levelling the playing field creates a minefield.
This is infinitely more complex than simply applying higher multipliers to warehouses as this will impact online players and high street operators in equal measure.
The business of business rates means there's limited impetus for reform.
Business rates is a big, reliable money-spinner. Historically, the government has raised £25-£28 billion per annum from business rates in England alone, while total UK-wide revenue is projected to rise to £35.8 billion for 2026/27.
Whatever the cash figures, ‘reliable’ is arguably the operative word. Business rates are fiscally neutral, meaning that whatever the uniform business rate (UBR) is, whatever weightings are applied through bandings and whatever relief is given, the net figure is still the same – but obviously still pegged to inflation.
Unlike other taxes, business rates are therefore fairly transparent, predictable, and relatively easy to collect. There is very little impetus to change any of these factors.
Is the system broken?
Here's a cursory recap of the mechanics of business rates and what makes them so complicated and in retailers’ eyes 'unfair'.
1. The standard multiplier
The standard (or base) multiplier is set at each revaluation period and business rates are calculated by multiplying the property’s rateable value by this figure, before any reliefs or transitional arrangements are applied.
2. Rateable value bandings
There are three different multipliers, based on RV property bandings:
- Properties <£51k RV can be up to 20p lower than the base multiplier.
- Properties £51k - £500k RV can be up to 10p lower than the base multiplier.
- Properties >£500k RV can be up to 10p higher than the base multiplier.
3. Relief
This complexity becomes a minefield when relief is factored in. Sole traders may be eligible for small business rate relief depending on the property’s rateable value.
- Single properties with a RV of £12,000 or less are exempt from business rates.
- For properties with a RV of £12,001 to £15,000, the rate of relief will go down gradually from 100% to 0% e.g. for a RV of £13,500, a 50% reduction, for a RV of £14,000, a 33% reduction, etc.
Outcome of the 2026 revaluation
The 2026 Draft List was released in tandem with the Autumn Budget in November 2025. The new rateable values reflected the change in rents between April 2021 and April 2024, and almost every commercial real estate sector saw an increase.
Overall, the total RV has increased by +19.2%. This has allowed government to reduce the standard multiplier (applied to RVs to calculate a ratepayer’s liability) from 55.5p to 48p.
Dressed up as a way of helping the high street, the government also announced permanently lower multipliers for occupiers of retail, leisure and hospitality (RHL) premises, as follows:
- RV below £51,000: multiplier of 38.2p
- RV £51,000 to £500,000: multiplier of 43p
These lower multipliers will be funded by a 2.8p supplement on RVs above £500,000, applicable to all commercial properties. In theory, a mindset of big retail businesses fitting the bill to the benefit of smaller operators. Those that can supposedly afford it helping out those that may struggle. The practice is very different, as legacy COVID discount relief was also phased out completely, having been reduced to 40% at the previous revaluation. The new lower multipliers replace any residual RHL relief.
In effect, many small-scale operators will be worse off than before.
The limitations of 'levelling the playing field'
The narrative around making business rates fairer has often made reference to levelling the playing field between high street and online retailers. The sentiment may be sound, but the thinking is flawed on two counts.
Firstly, many retail properties have a RV of more than £500k, particularly (but not exclusively) supermarkets, retail warehouses and stores in Central London. They are as much a part of the 'high street' as any other retailer and are clearly not going to see any benefit – quite the opposite.
Secondly, retail isn't binary, it's multi-channel. Warehouses used by large online retailers are also used by many high street operators. So, it’s just as likely to impact the likes of John Lewis, M&S and Next as it is Amazon. Many of the large retail operators will have the double whammy of higher rates bills on both their stores and their logistics sites.
The future – final thoughts
Rather than tinkering with multipliers and papering over the cracks with temporary or selective relief packages, deep reform is needed. There can be no panacea to a system this complex, but plenty of avenues to explore.
Relatively “quick fixes” that are simple and would relieve some of the pressure are more regular revaluations – a lot can happen within three years, as many occupiers have found to their cost. Reducing the revaluation period would help to smooth out some of the hefty rises and nasty shocks many properties are currently subject to.
Levelling the playing field? A sound notion on paper, but highly convoluted in practice. Simply applying higher multipliers to warehouses is not the solution, as this would affect high street retailers as much as their online-only counterparts. The playing field could only be levelled if online-only operators (or, say, retailers that generate x% of their revenue from non-store operators) were subject to higher multipliers on their warehousing and logistics facilities than multi-channel operators.
Rather than offset this through personal taxes, recoup any deficit through reform of corporation tax, ensuring that large multi-nationals (particularly tech giants) pay their fair share of corporation tax.
In the meantime, Prime Minister Andy Burnham said this in July: “I believe there is a case for higher business rates on warehouses and the major developments we see on the outskirts of our cities, so that we can cut business rates for pubs – I proposed a 20% cut – and lift some high street businesses out of business rates altogether.”
Hope springs eternal – or will the new boss be the same as the old boss?
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