One announcement at the 2024 Autumn Budget, that may well have slipped through the net of some businesses, is the changes to business rates.
While the small business rate multiplier used to calculate business rates in England and Wales for the 2025 tax year has been frozen at 49.9p, the standard multiplier has increased with inflation to 55.5p, and businesses need to be aware of how they will be impacted and what support may be available to them.
Business rate changes for the hospitality sector
For 2025-2026, the Retail Hospitality and Leisure (RHL) relief scheme has been extended, albeit at a reduced rate of 40% (down from 75% last year), which will see this capped at £110,000 per eligible business.
The Government believes the current regime is outdated, and intends to introduce permanently lower rates for retail, hospitality and leisure businesses with a rateable value under £500,000 from April 2026. This will apply only to properties in England.
It says this will “give long-term certainty and support to the high street” in contrast to RHL relief, which has been rolled over every year since the Covid-19 pandemic, creating uncertainty for businesses about the rates they’ll pay from one year to the next.
Support will be further targeted towards smaller RHL businesses, as those with a rateable value of less than £51,000 – who currently pay the small business multiplier – will receive the biggest cut.
Those paying the standard multiplier, with a rateable value of between £51,000 and £499,999 will also benefit, with the rates due to be announced at the 2025 Autumn Budget.
To fund this, the Government will also introduce a new higher multiplier for all properties with a rateable value over £500,000.
Changes and reliefs for other sectors
Other changes to Business Rates for the 2025 tax year include the removal of the charitable rate relief for private schools.
Charitable rate relief provides up to 80% off business rates and still applies if the property is used by a charity or its trustees or if it is used by a community amateur sports club.
Considerations for businesses
It will be important for all businesses to ensure their rateable value for the property is fair and updated.
For sectors with no relief, businesses will need to consider how these increased costs will impact them financially.
It is important to accurately update forecasts and cashflow projections with material changes.
