BUSINESS RATES The 2026 Revaluation – What’s happening?

Chris Grose

Chris is a Director in the Hartnell Taylor Cook Business Rates Team.  He is also Junior Vice President of the Institute of Revenues, Rating and Valuation (IRRV) and serves on the IRRV National Council.  Hartnell Taylor Cook LLP is on multiple public sector frameworks including, but not limited to, the Crown Commercial Services Estate Management Services 2 including Lot 6 Rating, and Homes England’s Property and Financial Professional Services Framework Lot 1 including Valuation Services.

Chris rightly identifies that there’s no such thing as a free lunch! Notwithstanding, here he gives a comprehensive rundown of the implications of the changes to Business Rates in 2026. 

It was a pleasure to attend the ACES Annual Lunch in Cardiff as the representative of the IRRV President.  I heard Betty Albon thanked for her work on the Terrier journal, little realising that a few weeks later I’d be paying for my lunch by writing an article for said magazine! 

A digression - Diversity 

The article is on my specialised subject - Business Rates - but before I move on to that subject, I’ll digress slightly.  A memorable part of the lunch was a chat session between Neil Webster and Cartier Olivia Charles, the latter having recently been elected to the Next Gen seat on the RICS Governing Council [Ed – see feature in this issue].  The session was inspiring, but also gave me cause to think of another person that was elected at the same time to the RICS Governing Council, Alan Colston. 

Alan is Chief Valuer at the Valuation Office Agency (VOA) which has some excellent diversity figures:  41% of their chartered surveyor caseworkers identify as female, and 15.6% are from an ethnic minority.  As a comparison, 18% of RICS members and candidates are women, although with 27% of APC candidates identifying as female, there are improvements.  It’s going to take a long time though for those changes to work through the profession. 

It would be interesting to know the statistics for other public sector bodies as that may give a clue as to how diversity within the profession can be improved.  Following your Annual Lunch, I headed up to London to attend the Rating Surveyors Association guest dinner, where while diversity appears to have increased, there’s a long way to go to match the Valuation Offices figures. 

I wish Cartier and Alan best wishes for their time on the RICS Governing Council; I believe they are excellent additions.  It is of course the fact that the VOA is responsible for the Rating List that provides the link between diversity and my topic. 

Business Rates – Introduction 

As a property professional, you would probably have had to have your head buried under a stone to miss the column inches that have been published over the past few months and years on business rates.  Those of you that work for district or unitary authorities will have a team that collects business rates, and we must commend them as they collect around 97% of the amount due in each year, with a collection cost of around 3% of the amount collected – these stats are why we are unlikely to see business rates replaced.  It’s a highly efficient form of taxation. 

So, while these teams are working hard, the rest of you will probably be looking at your budgets and pondering what can be done about the line that states business rates.  If you are in Scotland, the answer is not a lot unless you are in the run-up to a revaluation.  The Scottish Government has taken steps to prevent public bodies benefitting from the financial gains of a reduction in rateable value following an appeal, unless the body has raised concerns early in the process.  Many will probably consider this sensible; after all, what is the benefit to public finances overall of a public body having a reduction in rates when that reduction is paid for by another public body - except a percentage may have been extracted out the system by a private sector firm as fees. 

Meanwhile in England, one of the leading cases on rates avoidance involves a public sector body and this has led to not only the fees charged by their advisers being extracted by the private sector, but also the private sector saving millions in annual rate payments.  No wonder we keep hearing about consultations on empty rates. 

The basics 

Business rates are a tax on non-domestic property and are charged at a rate set by the government on a rateable value (RV) set by the VOA.  The RV is meant to represent the annual rental value of a property at a specific date, known as the antecedent valuation date (AVD).  In England and Wales the AVD is 2 years in advance of the compilation date - which is the date the Rating List comes into force.  So current RVs are on a list that came into force on 1 April 2023 and the AVD is 1 April 2021.  A new List comes into force on 1 April 2026 based on values as at 1 April 2024. 

The government clearly wants a consistent income from the tax base. The business rates system was designed in 1990 so that the total received year on year went up by the rate of inflation.  Following a revaluation, therefore, the rate in the pound is calculated by taking the previous year’s total revenue, adding inflation, and then dividing by the total value of the Rating List.  In theory, as the values in the Rating List are based on rents, there would be an expectation that the total value of the list would go up at revaluations and therefore the rate in the pound would fall. 

However, over time since that has not happened and a rate in the pound that commenced at 34.8 in 1990 was 45.6 in 2004/5, at which point a differential rate was introduced for properties with a larger RV.  This helped for a while, but by 2020/21 the lower rate had risen to 49.9p and there was concern about breaking the 50p barrier, although it had been breached for larger properties in 2019/20.  The pandemic meant that the Uniform Business Rates was held for 4 years and in 2024/25 and 25/26 the rate for smaller properties remained at 49.9, while for larger properties increased from 54.6 and 55.5. 

In England over the years there has been an increasing clamour about the impact of business rates on businesses, and the government has carried out a number of consultations.  Almost all have resulted in calls for the rate in the pound to be reduced, among other changes.  However, the government has consistently wanted revenue neutral alterations. 

Changes regarding the frequency of revaluations have been made and Scotland has successfully introduced a shorter gap between AVD and the List coming into force. 

The government has over the years also introduced reliefs to reduce the impact of rates on specific sectors, which culminated in the retail hospitality and leisure (RHL) introduced during and after the pandemic.  The problem with reliefs is always how are they withdrawn, especially when they were as generous as the RHL scheme was.  The withdrawal is made more difficult as the RHL sector is well represented, with plenty of organisations making their voices heard. 

The outcome is that for the 2026/27 and future years, new rates in the pound have been introduced offering reductions for many RHL properties and all paid for by an increase in the rate in the pound for large properties over £500,000 RV as shown in the table. 

England	2025–26	2026-27	Comment
Small business RHL multiplier		38.2p*	Retail, hospitality leisure (RHL) hereditaments under £51,000
Standard RHL multiplier		43p*	RHL Hereditaments with RVs between £51,000 and £499,999
National small business multiplier	49.9p	43.2p*	Non-RHL hereditaments with RV under £51,000
National standard multiplier	55.5p	48p*	Non-RHL hereditaments with RVs between £51,000 and £499,999
High-value multiplier		50.8p*	All hereditaments with RVs of £500,000 or above
* There is a 1-year, 1p supplement to rate bills for those not receiving transitional relief or the supporting small business scheme not shown in these figures

Wales	2025/26	2026/27
Standard multiplier	0.568	0.502
New retail multiplier (less than RV £51,000)	0.568	0.350
Higher value property multiplier (higher than £100,000)	0.568	0.515

It can be seen that the rate in the pound has reduced for all. The sting in the tail though is that for the rate in the pound to fall, the total value of the Rating List must have increased and indeed, the total value of the Rating List in England and Wales increased by 19.2%. 

For those authorities that are precepting authorities, the change from RHL reliefs to new multipliers is good news if they operate any properties in these sectors.  This is because precepting authorities should not have been in receipt of the reliefs.  They can though benefit from the lower multipliers.  However, many precepting authorities will have properties with RVs in excess of £500,000 so will be paying the highest rate on those. 

Rateable Value changes 

It terms of value, it’s probably not a surprise that London has seen the highest property value increase at 22.3%, while the region in England with the lowest increase was East Midlands at 16%.  Values in all sectors increased; the lowest increase is retail at 9.3% increase, the highest is “other” at 28.2%.  Other includes education, health, transport, leisure, accommodation and utilities. 

Looking in more detail at some property types (across England & Wales): 

Libraries up 13% 

Civic & public buildings up 11% 

Ambulance stations up 19% 

Fire stations Up 16% 

Crematoria Up 27% 

District heating undertakings up 12% 

Police stations up 11% 

Local authority leisure centres up 12% 

Local authority swimming pools Up 15% 

Local authority schools Up 13% 

Power stations Up 39% 

It should be noted that while the Valuation Roll for Scotland has been issued at the time of writing, the rates in the pound are unknown. 

The biggest increases were in civil airports with an average increase of 393% - Newcastle Airport going up by 714%; Doncaster 618%.  The increase for Heathrow was a mere 453% but the outcome is an increase from £210m to £951m. 

Transitional Relief 

From the operators’ point of view, it’s good news that there is a transitional relief scheme which caps increases in rates payable in England as follows: 

	2026/27	2027/28	2028/29
Small (up to £20,000 RV £28,000 in London)	5%	10%	25%
Medium (£20,001 (£28,001 in London) to £100,000)	15%	25%	40%
Large (over £100,000)	30%	25%	25%

Therefore some ratepayers in England will not reach their full liability over the course of the 2026 revaluation period.  The transitional scheme in Wales is different, and eligible ratepayers will pay 33% of the increase in 2026/27, 66% in 2027/28 and the full amount in 2029/30. 

Changes to the Rateable Value 

Until 31 March 2026 it is possible to commence the appeal process against 2023 Rating List entries.  There are limited circumstances where it can be started later.  As the process involves registering on the VO portal, claiming the property, and in some cases seeking the valuation, it is recommended the process begins earlier if an appeal is being considered.  The VO can alter a 2023 Rating List entry, including making a new entry, until 31 March 2027. 

The 2026 Rating List cannot be appealed until after in comes into force in April this year.  If there is a real concern about a Draft List entry, an informal application can be made to get it checked. 

Empty Rates 

Empty rates are a concern for many that hold non-domestic property that is vacant.  Retail and office properties get 3 months’ relief; industrial and warehousing 6 months’ relief after first becoming vacant; full rates as if occupied then become payable.  This has led to many to consider ways of reducing the liability and there are a number of schemes that are used. 

As already mentioned, one of the lead legal cases involves a government department successfully arguing its scheme worked and reset the empty rate liability period.  Empty rates is beyond the scope of this article, but care should be taken if a scheme is to be used to ensure that it works, is clearly legal, and that if you are a charging authority, your revenues team is not contesting the scheme through the courts!