Transforming Business Rates or Tinkering at the Margins?

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A Critical Look at Government Reform

The UK Government’s recent paper, ‘Transforming Business Rates,’ signifies a change in approach from overhauling the business rates system to implementing targeted reforms. Released with the 2024 Autumn Budget, the discussion paper invites businesses to express their priorities for change while at the same time highlighting the benefits of the current system, such as stable funding for local government and effective tax collection rates.

With reform, the Government aims to protect high streets, stimulate investment, and create a fairer system while seeking to engage in co-design. In our commentary we review the implications of these proposed changes for various sectors and provide insights for those interested in voicing their opinions. Read on to discover the possible impacts and opportunities for lobbying.

Key Insights

High street support or complexity?


Proposals to protect high streets may add complexity and confusion, raising questions about true beneficiaries and costs involved.

Reduced RHL Relief


Retail, Hospitality, and Leisure Relief will continue in 2025/26, though reduced to a 40% discount. As before, the £110,000 cap will limit the benefit for businesses with multiple properties.

Additional multipliers


New lower multipliers may be introduced for some properties in the retail leisure and hospitality sectors. This would be funded by a higher multiplier for higher value properties.

Impact on businesses with large or high value properties


High-value properties (Rateable Value (RV) £500,000+) face higher rates, potentially harming large businesses and impacting all sectors reliant on large buildings, irrespective of use.

Unclear multiplier levels


Details on new multipliers for retail, leisure and hospitality and higher value properties remain vague, with concerns about the impact on fiscal neutrality and meaningful tax reductions.

Risk of increased complexity


A move to five multipliers could lead to more confusion rather than the fairer, simpler system businesses desire. This comes with potential rental market implications.

Encouraging investment


The Government seeks feedback on Improvement Relief, though businesses advocate broader application and longer relief periods to genuinely encourage investment.

Challenges with SBRR ‘Cliff Edge’


Small Business Rates Relief (SBBR) structure may disincentivise growth, as expanding businesses can often face sudden, steep rate increases.

Revisiting Empty Property Relief


Current relief periods may discourage property improvements; extending the relief period could reduce reliance on mitigation schemes.

Ongoing reform delays


Many reforms, including transparency and fairer system measures, are delayed until as late as 2029, slowing progress toward a modernised system.

Calls for transparency and digitalisation


Steps toward fuller disclosure and digitalisation are positive but delayed, with critical information for ratepayers deferred until 2029.

Failure to address core Issues


Critics emphasise that despite reforms, high tax burdens remain, and the Government has missed an opportunity to fundamentally overhaul the business rates system.

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