Budget delivers a targeted high-street business rates package
The 2026 Budget update on Business Rates sets out a clear, if selective, intervention in business rates for high-street and leisure occupiers. The headline change is an increase in the Small Business Rates Relief threshold for retail, hospitality and leisure (RHL) businesses from £12,000 to £18,000, which the Government says will remove around 70,000 additional businesses from business rates altogether. On the Government’s figures, half of all shops, restaurants and gyms will pay no business rates at all.
Relief for RHL occupiers
For RHL businesses above the new relief threshold, the Chancellor has committed to freezing rates in real terms for the next two years. The practical effect is that no business in these sectors should face an above-inflation increase in its rates bill over that period.
This is a meaningful extension of support for the high street, particularly for smaller independent operators and mid-sized occupiers who have faced successive changes to reliefs and multipliers. It also aligns with the wider direction of policy towards permanently lower tax rates for qualifying RHL properties, with the cost recovered from higher-value premises.
Who pays for it
The package is not cost-free. The Chancellor confirmed that gambling taxation will be increased to help fund the relief, while adult gaming centres and vape shops will be carved out of business rates relief.
That carve-out is significant for ratepayers in those sectors. Businesses operating adult gaming centres or vape shops should not assume they will benefit from the new RHL relief threshold or the real-terms freeze, even where their premises would otherwise fall within the retail, hospitality and leisure categories.
Transitional relief extended
The Transitional Relief Supplement will also be extended for a further two years. Transitional relief exists to phase in bill changes following revaluation, limiting annual increases for ratepayers facing the sharpest rises.
Overall, this is a pro-high-street Budget announcement, but one funded partly by widening the tax base elsewhere. The detail of the exclusions and the interaction with the revaluation transition arrangements will determine the real-world outcome for many occupiers.
For advice on how these changes could affect your business, get in touch with our Rating team.
