Business Rates Update: What Retail, Hospitality and Leisure Occupiers Need to Know

Government confirms permanent rate cuts for smaller RHL occupiers – but uncertainty remains for larger and mixed-use premises.

In a significant development for the high-street economy, the Government has confirmed the scope of new business rates multipliers that will apply to the retail, hospitality and leisure (RHL) sectors in England from 1 April 2026, coinciding with the 2026 revaluation.

The changes mark the first time that shops, cafés, pubs, hotels, gyms and similar venues will receive a permanent structural reduction in business rates liability, replacing the temporary reliefs that have applied for several years.

Commenting on the announcement, Adam Barnfield, Head of Business Rates at Vail Williams, said the reforms represent “a welcome step towards stability for many high-street occupiers, but one that still raises important questions about fairness, funding and definition.”

Retail, Hospitality and Leisure (RHL) Business Rates Multipliers

From 1 April 2026, the Government will introduce two lower business rates multipliers (for England) for qualifying RHL occupiers with rateable values (RVs) below £500,000:

• Small Business RHL Multiplier – for properties with RVs under £51,000
• Standard RHL Multiplier – for properties with RVs between £51,000 and £499,999

These new multipliers will apply only to occupied hereditaments used “wholly or mainly” for in-person retail, hospitality or leisure activities for visiting members of the public.

The legislative definitions are set out in the Non-Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025 (SI 2025/1093), which will determine eligibility on a statutory rather than discretionary basis.

Importantly, there will be no cash cap on the benefit for chain businesses, meaning all eligible sites within a multi-site group should benefit, provided they meet the criteria.

The actual rate levels for the new multipliers will be confirmed at the Autumn Budget 2025 (scheduled for 26 November) and will reflect the results of the 2026 revaluation and wider fiscal context.

Alongside the two lower multipliers for sub-£500k RVs, the Government also intends to introduce a higher “surcharge” multiplier for properties with RVs of £500,000 and above.

This is designed to ensure the measure is fiscally self-sustaining and to shift more of the burden onto larger premises – including large warehouses and fulfilment centres – in line with the Government’s aim to support the high street.

Risks and Uncertainties

Properties with a rateable value of £500,000 or more will not be eligible for the lower multipliers. Indeed, they may face a higher “surcharge” multiplier that could increase overall liability.

Occupiers whose properties do not meet the “wholly or mainly” test — where the primary use is not in-person retail, hospitality or leisure — may also find themselves excluded, even if they operate in a related sector.

For example, online fulfilment centres, distribution warehouses, or offices serving retail operations are unlikely to qualify.

“The Government hasn’t even introduced the new multipliers yet, but already there’s a potential £500m funding gap,” said Adam Barnfield.

“Originally, the higher multiplier for large properties over £500k RV was meant to balance the cost of relief for smaller ones. However, with large supermarkets now excluded, that mechanism no longer works — so the question remains: who pays the difference?”

Mixed-use properties (for example, part retail/leisure, part office or back-of-house) will require careful assessment to determine whether the “qualifying purpose” test is met.

Some occupiers currently benefiting from relief may find they no longer qualify under the new statutory definitions.

“We understand the supermarkets’ position,” added Barnfield, “but once again this creates uncertainty in the business rates system. The ‘wholly or mainly’ test is too vague – the legislation needs to be watertight, with clear, exhaustive definitions to avoid confusion and disputes.”

It also remains possible that although the multiplier is lower, the rateable value following the 2026 revaluation may rise, potentially reducing or offsetting the expected savings. The reform must therefore be viewed in tandem with revaluation risk.

The proposed surcharge on large properties (RV ≥ £500k) may also create a “double hit” for some occupiers: they are excluded from the lower multipliers and could face higher liabilities due to both revaluation and the surcharge.

Taking Action Now

The announcement of lower business rates multipliers for retail, hospitality and leisure occupiers represents a welcome turning point for many high-street businesses, offering a permanent reduction and removing much of the uncertainty that has surrounded relief schemes in recent years.

However, the benefit will not be universal. Eligibility will depend on precise use-type and RV thresholds, and larger or mixed-use properties could face higher costs.

“These measures show positive intent to support the high street,” concluded Barnfield.

“But with eligibility tests, revaluation risks and new multiplier thresholds all coming into play at once, it’s vital that occupiers model the potential impact early and plan accordingly.”

By reviewing your property portfolio, assessing eligibility and modelling likely liabilities now, you can put your business in the strongest position ahead of April 2026.

If you occupy or lease premises in the retail, hospitality or leisure sectors, now is the time to take proactive steps.

Contact Vail Williams’ Business Rates team for an initial review of your portfolio and to develop a tailored strategy ahead of the 2026 revaluation and new multiplier regime.