Autumn Budget 2025 – Permanently Lower Business Rates

November 27, 2025

Business rates are paid by the occupiers of commercial properties (subject to limited exceptions) to their relevant Local Authority. With high street shops facing increasing competition from online retailers and with the turbulent economy in recent times, many businesses are struggling to afford such operating costs. The Government in their November 2025 Autumn Budget, have now introduced changes to business rates to help with this which will apply from the financial year beginning April 2026.

What has been announced in the Autumn Budget?

In an attempt to stimulate the retail economy and sustain our high streets, Rachel Reeves announced in the November 2025 Budget a permanent reduction in business rates for the Retail, Hospitality and Leisure (RHL) sector. The cuts will apply to business rates in the RHL sector with a rateable value of below £500,000 and will be particularly beneficial for smaller to medium sized businesses with retail, leisure or hospitality businesses. e.g. cafés, independent shops, and pubs. To fund this change, the business rates payable on properties with a rateable of £500,000 or over (such as warehouses, large retail sites or commercial properties) will be increased.   

How the changes to Business Rates will be applied   

Business rates are calculated by the Local Authority using a property’s “rateable value” (the open market rental value of a property estimated by the Valuation Office Agency) and multiplying this by a “multiplier” set by the Government.

The Government has confirmed in the Autumn Budget “the RHL multipliers will be 5p below their national equivalents, making the small business RHL multiplier 38.2p and the standard RHL multiplier 43p in 2026-27.”[1]

Our view

For many small businesses, this could provide long-term relief and stability, with the lowered ongoing rates and less risk of sudden hikes.

We anticipate these changes to act as an incentive for smaller businesses already in the RHL sector looking to expand, as well as presenting an opportunity to new businesses looking to start their first physical store. The RHL sector is broad and includes a wide array of businesses from bakeries, bars and convenience stores; these are all a staple to our high streets and we hope this change in business rates is the boost the high streets need for recovery and to maintain a presence in light of the ever growing competition from online retailers; we could see this level the playing field somewhat.

How we can assist

Our Real Estate team are experienced in transactions involving a wide array of commercial properties both in the RHL sector and beyond, and can assist in their acquisitions and disposals, as well as with commercial leases or lettings.

Occupiers who plan ahead may be able to negotiate better lease terms, reduce liabilities or identify errors in valuations which will have a critical role in the potential for reducing rates liability. There are key lease provisions in a lease to check and we can assist with possible strategy options.

Whether you have just started your business and have agreed terms on your first commercial lease, or are an experienced business owner who has agreed the purchase of a new business premises, our Real Estate team can assist, please contact us to speak to a member of the team.

[1]https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html#economic-and-fiscal-outlook

Rachel Duncan
Partner, Real Estate
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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