If you own, occupy, or manage commercial property in England or Wales, the business rates landscape has just shifted significantly. On 1 April 2026, a new revaluation takes effect alongside reforms that will change how rates bills are calculated for virtually every non-domestic property. Whether you run a high street shop, manage a portfolio of industrial units, or oversee a large distribution centre, these changes will affect your bottom line.
New Rateable Values Come into Force
Every non-domestic property in England and Wales has a rateable value — essentially an estimate of the annual rent the property could command on the open market at a set point in time. The Valuation Office Agency (VOA) carries out periodic revaluations to ensure these figures keep pace with market conditions. From 1 April 2026, updated rateable values will apply across the board.
For properties, the new rateable value will mostly go up; but for some others, it will come down. The direction of change will depend on how rents in your area and sector have moved since the last valuation date.
If there has been rental growth — as many industrial and logistics locations have — you can expect a higher rateable value and, in turn, a higher rates bill. Conversely, properties in areas or sectors where rents have softened may see a reduction.
The rateable values are not your rates bill. They are one half of the equation. The other half is the multiplier.
Five New Multipliers Replace Two
The most significant change is the move from a two-multiplier system to five new business rates multipliers. Under the previous system, there was one multiplier for smaller properties and another for larger ones. From April 2026, there will be a more graduated approach with five separate multipliers.
The aim is to provide greater support for high streets and smaller businesses whilst requiring larger properties — particularly those occupied by major distribution and logistics operators — to shoulder a greater share of the rates burden. This means that if you occupy a smaller retail unit on the high street, you should benefit from a lower multiplier. If you occupy a large warehouse or out-of-town retail park, you are likely to see a higher one.
The precise multiplier that applies to your property will depend on its rateable value and its use.
A £4.3 Billion Support Package
Recognising that any revaluation causes ups and downs the government has announced a £4.3 billion support package spread over three years. This is designed to cushion the impact of the transition, particularly for those businesses that might otherwise face sharp increases.
The package includes an expansion of the Supporting Small Business scheme, which caps the annual increase in rates bills for eligible small businesses, and protection for independent pubs and shops. Businesses moving to lower rateable values are meant to see the benefit of reduced bills relatively quickly, whilst those facing increases are given time to adjust.
Reliefs and Transitional Arrangements
Beyond the support package, the existing system of reliefs continues to play an important role. Small business rate relief, charitable rate relief, and various other exemptions remain available, and local councils retain discretion to offer additional support in certain circumstances.
Transitional relief is also a critical factor for many ratepayers. Where a revaluation results in a large increase in your rateable value, transitional relief limits how quickly your bill can rise each year, phasing the increase over the life of the rating list.
However, properties whose rateable values have fallen may not see the full benefit immediately either, as transitional arrangements can also slow the pace of reductions.
Other reliefs include: –
- a 5% tax cut for retail, hospitality and leisure premises with a rateable value under £500,000; and
- a 15% rates discount for pubs and music venues.
Even with these reliefs, many high street businesses will still see rate bills increase significantly and there is concern that traditional shop retailers will find themselves under greater cost pressure.
How Can Higher Business Rates Affect a Commercial Lease?
Commercial leases will usually pass business rates liability to the tenant when the tenant covenants to pay all outgoings under the lease. As rates may increase significantly from April 2026, this may provide a threat to ongoing occupation by the tenant and risk of forfeiture of the lease if the tenant breaches this covenant.
If a tenant terminates the lease and leaves due to liquidation or forfeiture, and the premises are left vacant, then landlords can face business rates exposure once any empty property relief period has expired.
This could mean landlords become responsible for business rates on void properties after the three-month empty property relief has expired. This is a significant cost to both tenants and landlords to be aware of.
What You Should Do Now
The 1 April 2026 changes represent a meaningful shift in the business rates system, and preparation is key. We would encourage every commercial property occupier and owner to take the following steps:
- Review your new rateable value as soon as it is published.
- Understand which multiplier will apply to your property.
- Check your eligibility for reliefs and transitional support.
- Consider challenging your valuation if it appears incorrect.
- Consider how increased rates affect your commercial lease.
