The Chancellor used Budget 2026 on 28 October 2026 to raise the Small Business Rates Relief threshold for retail, hospitality and leisure (RHL) properties in England from a rateable value of £12,000 to £18,000 for 100% relief, and from £15,000 to £21,000 for tapered relief, from 1 April 2027. The Treasury says around 70,000 more RHL businesses will pay no business rates, and that half of all RHL properties in England will pay none.
What changes
The Budget document lists four changes for premises in England from 1 April 2027:
- higher Small Business Rates Relief thresholds for qualifying RHL properties, kept under review alongside the 2029 revaluation;
- a real-terms freeze on RHL bills in 2027 to 2028 and 2028 to 2029, with bill increases capped by CPI inflation. The cap does not cover increases from improvements to a property or the loss of other reliefs;
- a one-year extension of the 2026 Supporting Small Business scheme to ratepayers who received the 2023 scheme, covering around 37,000 small and independent ratepayers with protection worth an average of £3,000;
- vape shops lose the RHL multipliers and Small Business Rates Relief, and adult gaming centres lose the RHL multipliers.
The freeze is partly funded by extending the 1p Transitional Relief Supplement for two years. It is paid by properties whose bills rise by less than the transitional caps, or fall.
The Treasury says an extra 3,500 pubs, 3,900 restaurants, 2,200 cafés and 1,700 hairdressers and beauty salons will pay nothing from April 2027, and around 110,000 RHL properties will see bills fall.
What it means for a small firm
The official small business RHL multiplier for 2027 to 2028 is 39.7p, up from 38.2p. In this Small Cap News calculation, bills are for 2027 to 2028 before transitional caps and other reliefs, assuming a straight-line taper between £18,000 and £21,000, as now:
- Rateable value £15,000: £5,955 (15,000 x 39.7p) under the old thresholds; nothing under the new ones.
- Rateable value £18,000: £7,146 before; nothing after.
- Rateable value £19,500: £7,741.50 before; £3,870.75 after (50% relief).
- Vape shop, rateable value £12,000: nothing before; £5,364 after, on the 44.7p small business multiplier with no relief.
- Adult gaming centre, rateable value £30,000: £11,910 before; £13,410 after, £1,500 more.
A property paying the 1p supplement adds £10 for every £1,000 of rateable value, so £600 a year at a rateable value of £60,000.
The documents set out no change to Small Business Rates Relief thresholds for offices, workshops or other premises outside retail, hospitality and leisure.
Cost and reach
The Budget scorecard puts the threshold rise at £315 million in 2027 to 2028 and £320 million in 2028 to 2029. The freeze and support package costs £10 million and then £230 million over the same two years, after the supplement. Removing reliefs for vape shops and adult gaming centres raises £10 million a year.
Business rates are devolved. The changes apply in England only. Scotland, Wales and Northern Ireland receive Barnett funding they may use for similar measures.
Key facts
- 100% relief threshold for RHL properties: £12,000 to £18,000 rateable value
- Tapered relief ends at £21,000, up from £15,000
- Start date: 1 April 2027, England only
- Around 70,000 more RHL businesses pay no rates
- 1p supplement extended for two years to help fund the freeze
- Vape shops and adult gaming centres lose reliefs from April 2027
Source: HM Treasury, Budget 2026 (gov.uk), Budget 2026 policy costings, HM Treasury press release "Budget 2026: Breathing space for today, hope for the future" and HMRC "Overview of tax legislation and rates" Annex A, published 28 October 2026. See also: Data & Surveys, Funding and how to send us your news.