Rachel Reeves delivered her first budget as Chancellor today, making a number of announcements aimed at delivering growth to the country.
We wanted to focus on business rates and delve into the announcements made, providing a bit more insight into what these changes mean for you and your business.
The headline announcements are as follows:
Small business multiplier frozen at 49.9p
Standard business multiplier rising to 55.5p
40% relief for retail businesses in 2025/26, capped at £110,000
From 2026/27, two new retail specific multipliers, a small retail multiplier and a standard retail multiplier
Funded by a new large multiplier for properties with rateable values above £500,000
Going through point by point:
Small business multiplier frozen at 49.9p and standard business multiplier rising to 55.5p
The freezing of the small multiplier is welcome news and the Government anticipates this to save businesses £145 million in 2026/27 alone. The small business multiplier has been frozen at this figure since 2020/21. The multiplier likely would have increased to 50.8p without this action.
The standard multiplier has risen by September's CPI figure of 6.7% from 54.6p to 55.5p.
Multipliers are used to calculate business rates liability before any reliefs are applied. For example, a property with a rateable value of £100,000 will be paying £54,600 (100,000*0.546) in 2025/26 and will now pay £55,500 (100,000*0.555) in 2026/27.
40% relief for retail businesses in 2025/26, capped at £110,000
Reliefs of this nature have existed since 2019 with varying degrees of scope and amount. They have often been criticised as being short term plasters as they are announced annually and only last a year, not allowing for businesses to be able to make long term plans.
Presently, the relief is worth 75% for the 2024/25 year, so this is a significant drop in value and will see eligible businesses have their bills increase by roughly 140%. The current relief was slated to expire on the 1st April 2025, so a continuation in any kind is still a welcome result for high street businesses.
The relief remains capped at £110,000, this is enough to provide support to most small businesses but mean large businesses remain out of the scope of the relief.
From 2026/27, two new retail specific multipliers, a small retail multiplier and a standard retail multiplier
Effectively, from 1st April 2026, retail properties with a rateable value below 51,000 will be on the small retail multiplier, those between 51,000 and 500,000 will be on the standard retail multiplier and those above 500,000 will receive no support.
There has been no statement as to what these multiplier will be.
However, for a bit of context, if a small retail multiplier of 30p is introduced, a shop with a rateable value of 10,000 will be paying £3,000 per annum. Presently, a shop with a rateable value of 10,000 will pay £1,247.50 a year and next year they will pay £2,994 a year.
Notably, a reduction to the multiplier will likely not be capped in the same way the current relief is, meaning a business with a large portfolio of properties will receive significant support.
It will be crucial to see exactly where the multipliers land to judge whether this will be a successful policy. It is clearly welcome for retail properties to have a level of permanence in the support they receive compared to the temporary nature of the current relief.
The cliff edge nature of a hard cut off at 500,000 does create a rather unfair drop off between a property with a rateable value of 495,000 receiving help and one of 500,000 receiving nothing.
Funded by a new large multiplier for properties with rateable values above £500,000
It has been announced the retail multipliers will be paid for by a new multiplier applicable to properties with a rateable value above 500,000.
Within the budget document, the Government make clear the intention is to capture warehouses occupied by online giants, whilst this will capture some, it won't catch them all and it will definitely include businesses outside of online giants.
No detail has been provided on what this multiplier will be. It will be a tricky balancing act to not rise the multiplier so high it puts off investment from large businesses but also high enough that it can adequately fund effective discounted retail multipliers.
For more information on anything discussed above, please get in touch with on 0208 0950 990 or info@hollowaybond.co.uk.
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