By Jonathan Young, Partner & Head of Business Rates, Fisher German
Jonathan Young is a highly experienced rating and valuation surveyor with expertise over a broad range of commercial sectors which has been gained over the last 25 years. He is a specialist in trade related rating and valuation work, with extensive knowledge of the bulk class (office, industrial and retail) sectors, alongside specialist knowledge of the leisure sector, specifically holiday caravan parks, and institutional properties such as schools and hospitals.
For decades, business rates have been one of the most controversial pillars of the UK’s tax system. Raising nearly £25 billion annually for government and local authorities, the system remains essential to public finances – yet it has long been criticised as outdated, broken, and in need of fundamental reform.
As the 2026 revaluation arrives, and with it the most extensive programme of reform in over a decade, it raises the question – will these changes genuinely make the system fairer, more efficient, and more reflective of modern commercial realities?
A faster revaluation cycle
From 1 April 2026, all non-domestic properties in England and Wales have received new rateable values based on rental evidence from April 2024. Crucially, this is the first revaluation under the new three-year cycle introduced through the Non-Domestic Rating Act 2023.
The shift to more frequent revaluations is widely welcomed. Historically, valuations often lagged far behind real market conditions, meaning businesses could be paying rates based on outdated property values. By updating valuations more regularly, the government hopes liabilities will track economic reality more closely.
However, the impact will not be evenly distributed. For many businesses, particularly in London and major distribution hubs, the shift is expected to be significant. Rising rental values in prime locations and industrial sectors mean some occupiers will see substantial increases. Conversely, businesses in areas with weaker markets may benefit from reduced valuations.
The shift to five multipliers
Perhaps the most significant structural reform is the replacement of the long-standing two-multiplier system with a new five-multiplier model, which will take effect this month.
The new structure will consist of:
· Small Business Multiplier
· Standard Multiplier
· Small Retail, Hospitality and Leisure (RHL) Multiplier
· Standard RHL Multiplier
· High Value Property Multiplier for properties with a rateable value above £500,000
For the first time, qualifying retail, hospitality and leisure premises will benefit from permanently lower multipliers. This marks a clear policy shift aimed at supporting high streets and consumer-facing sectors that have faced significant pressures in recent years.
At the same time, the introduction of a higher multiplier for high-value properties reflects the government’s intention to rebalance the system – shifting some of the burden away from SMEs and traditional retail towards larger commercial occupiers, particularly major logistics operators and corporate headquarters.
While the objective may be politically attractive, the practical implications are likely to be more complex.
Transitional support and reliefs
Recognising the disruption revaluations can cause, the government has confirmed a package of transitional measures designed to smooth the impact.
A new three-year transitional relief scheme (2026–2029) will cap annual increases in business rates bills, preventing sudden spikes in liability. Importantly, while increases will be phased in, reductions in bills will be applied immediately – offering welcome relief for businesses in struggling locations.
Support for smaller occupiers is also being strengthened. The Supporting Small Business (SSB) scheme will continue to limit annual bill increases for eligible ratepayers to the higher of £800 or the relevant transitional cap.
Meanwhile, a long-awaited reform to Small Business Rates Relief (SBRR) will extend the grace period for businesses expanding into a second property from one year to three years. This change is intended to remove the so-called “growth penalty” that has historically discouraged small firms from scaling up.
London, and wider sector pressures
Despite these measures, not all sectors will escape the impact of the 2026 changes.
The hospitality industry in particular faces growing concern. Updated valuation evidence suggests many pubs and hospitality venues, which have been buoyed by post-pandemic recovery in trading performance, could see sharp increases in their rateable values.
London is another potential flashpoint. Offices and retail properties in central London, already among the most expensive commercial premises globally, may feel the combined impact of rising valuations and the new high-value property multiplier.
For landlords and occupiers in key commercial hubs such as the City and Westminster, liabilities could increase significantly. The challenge will be ensuring these changes do not undermine London’s competitiveness at a time when hybrid working and wider economic uncertainty are already reshaping demand for office space.
A more transparent – but more complex – system
Alongside these structural reforms, the government is also introducing greater reporting requirements for businesses.
Under the forthcoming Duty to Notify regime, which is which is effective 2029 but crucial to prepare for now, businesses will be required to report key property changes – including new leases, alterations and structural adjustments – to the Valuation Office Agency (VOA) within strict deadlines. Failure to comply could lead to escalating financial penalties.
While these measures should improve transparency within the system, they will also increase the administrative burden on businesses and property owners. Companies will need stronger internal processes and closer collaboration with professional advisers to ensure compliance.
The VOA has also committed to providing greater visibility into how valuations are calculated, addressing long-standing criticism over the lack of transparency in the rating system.
Reform, but not resolution
While many elements of the reform package have been welcomed, particularly the move to more frequent revaluations, significant concerns remain.
One major issue is the potential unintended consequences of the new five-multiplier system. Although it is designed to target large online retailers operating from vast warehouse spaces, the reality is that many mid-sized logistics and manufacturing operators could also be caught by the higher multiplier.
At a time when parts of the manufacturing sector are already under pressure, this could create additional financial strain for businesses that are far from the intended policy target.
To partially offset pressures in hospitality, the government has announced targeted support for pubs. From 2026/27, pubs will receive an additional 15% relief on their business rates bills, with increases limited to inflation for the following two years.
However, this support does not extend to the wider sector, leaving many facing continued uncertainty.
Ultimately, while the 2026 reforms represent a meaningful attempt to modernise the business rates system, they are unlikely to resolve all its longstanding challenges.
Much will depend on how effectively the Valuation Office Agency can deliver the new system, how quickly disputes can be resolved, and whether the reforms genuinely reflect the economic realities facing businesses across the country.
For now, the question remains whether these changes represent a genuine turning point, or simply another step in the long and ongoing evolution of one of the UK’s most contentious taxes.