Government Releases New Draft Rates for Retail, Hospitality and Leisure Sectors

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 What’s changing

  1. From 1 April 2026, the government will introduce new lower business-rates multipliers specifically for RHL properties (shops, hospitality, leisure) with a rateable value (RV) under £500,000. (GOV.UK)
    • Two categories:
      • Small business RHL multiplier → for those with RV under £51,000. (GOV.UK)
      • Standard RHL multiplier → for those with RV from £51,000 to £499,999. (GOV.UK)
    • These new multipliers replace the previous scheme of reliefs (e.g., the 40% relief scheme) for such properties. (Armstrong Watson)
    • There will be no cash cap on the benefit for those qualifying properties under the new multipliers. (GOV.UK)
  2. The legislative definition of what counts as an RHL property is now published, via the Valuation Office Agency (VOA) guidance and the regulations:
    • Qualifying properties must be occupied and wholly or mainly used for a qualifying purpose (retail sale or hire of goods / hospitality food & drink / leisure & recreation) and accessible by the public. (GOV.UK)
    • If an RHL property becomes vacant (after empty-property relief ends), the standard multiplier will apply (not the reduced RHL multiplier). (GOV.UK)
  3. To fund these cuts to smaller RHL properties, the Government is introducing a supplementary multiplier (or higher multiplier) for properties with RV of £500,000 or above from 2026. (landlordzone.co.uk)
  4. In the short term (for 2025-26), the RHL relief scheme is being extended but at a reduced rate:
    • For eligible RHL properties, relief of 40 % (down from 75 %) up to a cap of £110,000 per business for 2025/26. (Armstrong Watson)
    • Meanwhile, standard and small business multipliers for general properties: the standard multiplier has been increased with inflation, the small business multiplier frozen. (Armstrong Watson)
  5. On the communication side:
    • The Government (via the Local Authorities) has published business-rates information letters (like “Information Letter 4/2025: RHL Multipliers”) to give advance notice of the upcoming changes. (GOV.UK)
    • Local Authorities and software suppliers need to prepare to show all five multipliers on demand notices from 2026. (GOV.UK)

 Key thresholds & eligibility

Threshold Details
RV < £51,000 Qualifies for the “small business RHL multiplier”. (GOV.UK)
RV £51,000-£499,999 Qualifies for the “standard RHL multiplier”. (GOV.UK)
RV ≥ £500,000 Does not qualify for RHL multiplier; subject to higher multiplier/supplement. (landlordzone.co.uk)
Relief for 2025-26 40% relief for RHL-eligible properties up to £110k per business. (Armstrong Watson)

 What’s not yet finalised

  • The exact rate (pence in the pound) for the two RHL multipliers will be announced in the Autumn Budget 2025. (GOV.UK)
  • The draft list of rateable values (for the 2026 revaluation) will be published later in autumn by the VOA. (Allsop)
  • Some question over whether large “anchor” retail stores (with RV > £500,000) might be exempted from the higher multiplier/supplement—this is still under debate. (landlordzone.co.uk)

 Implications & what to watch

  • For smaller high-street retail, hospitality and leisure businesses (RV < £500k) this is good news: they’ll have more certainty of lower tax burdens from 2026.
  • For larger properties (RV >= £500k) the tax burden may increase (to fund the cuts for smaller ones). Some large retail chains are already warning of extra costs. (Colliers)
  • Businesses need to check eligibility carefully (main-use test, “visiting members of the public”, occupied status) — being partly mixed-use may affect qualification.
  • Accounting and budgeting: since the exact rates are unknown, businesses should model scenarios (e.g., “what if multiplier is 20p lower”) and stay alert to the upcoming Autumn Budget announcement.

 For your article / use case (if you’re writing about this)

Since I see you often write detailed articles, here are some angles you might want to highlight:

  • Case study: A small independent café with RV £40k — how will its bill change under the new multiplier vs current relief?
  • Comparison: A large retail chain store with RV £600k — how will the proposed higher multiplier impact it?
  • Unintended consequences: Could increasing costs on anchor stores reduce footfall in high streets? (Some experts warn yes) (Colliers)
  • Implementation issues: What do local authorities and billing software vendors need to prepare? (E.g., showing five multipliers on demand notices)
  • Timing: The relief for 2025/26 is transitional; the permanent system starts 2026. It’s important to mark this timeline clearly.
  • Good question. Here are some case-studies, expert commentary, and trade-reaction around the UK government’s new draft business-rates proposals for the Retail, Hospitality, and Leisure (RHL) sector — plus key risks and benefits.

    Case Studies & Illustrative Examples

    While the government hasn’t released detailed “here are 10 named shops + pubs + gyms and how much their bill changes” case studies, we can build some plausible scenarios from the policy, supported by expert modelling and commentary. These help show how the new rates might play out across different types of RHL businesses.

    1. Small Independent Café
      • Profile: A café in a town centre with a rateable value (RV) of, say, £45,000.
      • Under new system (from April 2026): It would qualify for the small-business RHL multiplier, because its RV is under £51,000. (GOV.UK)
      • Impact: This café could pay significantly less in business rates compared to what it might pay under a non-RHL multiplier, helping free up cash for staffing or refurbishment.
    2. Regional Pub Chain Outlet
      • Profile: A pub belonging to a mid-sized chain, RV ~ £200,000.
      • Under new system: Qualifies for the standard RHL multiplier (RV between £51,000 and £499,999). (GOV.UK)
      • Impact: The removal of the £110,000 cash cap (which existed under the temporary relief scheme) is a big deal: multi-site operators benefit more, because each qualifying location can get support rather than being limited by a per-business cap. (MorningAdvertiser.co.uk)
      • But: If this chain also has larger flagship sites (RV ≥ £500,000), those might face a “supplement” (i.e., higher multiplier) to help fund the relief. (MorningAdvertiser.co.uk)
    3. Leisure / Gym Facility
      • Profile: A gym or leisure centre, RV say £450,000.
      • Under the new framework: Also qualifies for the standard RHL multiplier (since it’s under £500k).
      • Impact: This could mean a more stable and predictable rates burden compared to temporary reliefs — useful for planning capital investments (e.g., new equipment).
    4. Large Retail Warehouse / Anchor Store
      • Profile: A big-box store or supermarket with RV ≥ £500,000.
      • Under new system: These do not qualify for the lower RHL multiplier. Instead, they may be hit with a supplementary (higher) multiplier. (GOV.UK)
      • Impact: That could be a substantial cost increase, especially after revaluation. As some analysts note, penalizing these big stores may have unintended knock-on effects (e.g., footfall, high-street ecosystem). (estatesgazette.co.uk)
      • Strategic risk: If anchor tenants face huge cost increases, their business model might be squeezed, which could in turn hurt smaller high-street shops that rely on foot traffic.
    5. Multi-site Restaurant Group
      • Profile: A restaurant chain with many sites, each with moderate RVs.
      • Under new system: Each site under £500k qualifies individually, without cash cap. (MorningAdvertiser.co.uk)
      • Impact: Better-than-expected benefit for chain operators: previously, cash-cap limited how much total relief they got across all sites. The change could make high-volume expansion more sustainable.

    Expert & Industry Commentary

    Here’s a breakdown of what different experts, firms, and trade bodies are saying — the positives, the concerns, and key uncertainties.

    1. Colliers (Property Adviser / Consultant)
      • Criticism: Colliers warns that the reform might be “misguided.” (estatesgazette.co.uk)
        • Their argument: While smaller RHL properties benefit, the burden is being shifted to very large properties (RV ≥ £500,000). This could hit supermarkets, big retail warehouses, and other “big-box” locations hard. (estatesgazette.co.uk)
        • They worry about the broader high-street ecosystem: if large anchor stores struggle, that may hurt overall footfall and local economies. (estatesgazette.co.uk)
      • Funding mechanism: Colliers notes the higher multiplier on very large properties will fund the RHL discount. (Colliers)
      • Revaluation risk: Even with lower multipliers, some RHL operators may not feel much benefit because of the 2026 revaluation pushing up RVs. (Colliers)
    2. Tax / Property-Tax Specialists (Ryan, via Morning Advertiser)
      • Alex Probyn from Ryan (property tax) comments:
        • The scrapping of the £110,000 cap is “a major boost” for multi-site operators. (MorningAdvertiser.co.uk)
        • But he flags risk: “many will now be anxiously waiting” to see what happens for larger sites (≥ £500k) and how big the “supplement” is. (MorningAdvertiser.co.uk)
        • He also notes that while smaller independents will see a more stable rate burden (rather than temporary relief), the reform isn’t a “step-change” for all — some may only get similar benefits to what they have now, not huge drops. (MorningAdvertiser.co.uk)
    3. Government / Treasury
      • The government argues this is a permanent structural change, not just another temporary relief. (GOV.UK)
      • According to their guidance, the new multipliers will apply only to occupied RHL properties “wholly or mainly” used for retail, hospitality or leisure. (GOV.UK)
      • They’ve made clear in the regulation that there will be no cash cap for the new RHL multipliers. (GOV.UK)
      • To fund these lower multipliers, they plan to introduce a higher multiplier for all properties (not just RHL) with RV ≥ £500,000. (GOV.UK)
    4. Business Communities / Trade Bodies
      • Some small-business advocates welcome the changes: for instance, Lewis & Co, a property advisory firm, points out that tens or hundreds of thousands of small RHL businesses will benefit. (Lewis & Co)
      • But there is wariness: rising non-RHL multipliers may shift the burden in ways that could hurt property-intensive sectors not covered by the RHL discount.
    5. Economic / Property Research (Cushman & Wakefield)
      • In their “Decoding Business Rates” report, they model that retail could see a double benefit: lower re-based rateable values (from the 2026 revaluation) plus lower RHL multipliers. (assets.cushmanwakefield.com)
      • However, they also warn: if the “high-value multiplier” for properties ≥ £500,000 is set too high, this could wipe out competitive advantages or impose large costs — since many properties across sectors will be hit, not just RHL.

    Key Risks, Trade-offs, and Strategic Implications

    Putting together the case studies and expert views, here are the major risks and trade-offs worth highlighting:

    • Anchor Store Risk: Large high-value properties (supermarkets, big gyms, major leisure venues) might take a big hit. If their costs balloon, they might curtail operations or pass costs to consumers, which could undermine footfall on high streets.
    • Revaluation Uncertainty: The final multiplier rates haven’t been confirmed — they will be set at the Budget 2025. (GOV.UK) That means some businesses are still modeling “what-if” scenarios.
    • Funding Pressure: The plan is funded by placing more burden on the top 1% of properties by RV, but if that group resists or if assessments change, there is risk the support for RHL could be less generous than expected.
    • Administrative Complexity: Local Authorities will need to interpret which properties qualify (e.g., “wholly or mainly” used for RHL) under the new statutory definition. (GOV.UK) This could lead to disputes.
    • Cash Flow Timing: There is a gap — in 2025/26, the sector gets a 40% relief (capped at £110,000) as a bridge. (GOV.UK) Businesses need to plan for that transitional year carefully.

    Commentary Summary: Pros vs Cons

    Pros / Benefits Concerns / Criticisms
    More permanence in support (not just annual relief) (GOV.UK) Higher burden on very large properties (RV ≥ £500k) (estatesgazette.co.uk)
    Removal of cash cap helps multi-site chains (MorningAdvertiser.co.uk) Some small-to-medium RHL firms may still not see a “step-change” in savings (MorningAdvertiser.co.uk)
    Predictability/long-term certainty for RHL businesses planning capital or staffing Risk to anchor stores might weaken high-street ecosystems if they pull back, close, or cut investment (estatesgazette.co.uk)
    Supported by a clear legal definition for what qualifies as RHL (GOV.UK) Complexity and cost for local authorities / billing systems to implement the changes (GOV.UK)

    My Analysis & Key Take-Aways

    • This reform is important and potentially transformative for the high street. By shifting from temporary relief to a structural multiplier change, the government is signaling long-term support for smaller RHL businesses.
    • But it’s not risk-free: the funding model (higher rates on big properties) could impose very real pain on large-scale RHL or non-RHL premises. If those large players struggle, the knock-on effect could harm broader town-centre vitality.
    • For smaller RHL operators, there’s a meaningful opportunity: they should run detailed financial models now, under different possible multiplier settings, to see how much they could save or how their cash-flow will change.
    • Local authorities and billing software providers should be proactively preparing, because “determining eligibility” under the new legal definitions will be non-trivial.

 

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