The Treasury has responded to mounting pressure from businesses facing higher taxes, confirming that a multi-billion-pound support package will ensure over half of all ratepayers will see no increase in their bills next year. This comes after the Chancellor's Autumn Budget announced significant changes to business taxation, including the end of a key discount for some sectors.
Budget Changes Spark Pleas for Wider Support
In the Autumn Budget, the Chancellor laid out plans for updated business tax rates, which will be phased in over a three-year period. A central change involves using new property valuations from April 2026, a move that is expected to increase the commercial property tax burden for many companies. Simultaneously, the 40% discount for retail, hospitality, and leisure firms is set to be withdrawn in April of this year.
These announcements prompted immediate calls for the government to extend support. While specific aid for pubs has been created, major UK hotel chains and holiday park operators have pleaded for similar relief to be expanded across the wider hospitality and tourism sector. Conservative MP Joe Robertson directly questioned the Chancellor on whether plans existed to extend business rates relief to retail businesses.
£4.3bn Package to Cushion the Blow
In response to these concerns, the Treasury has detailed a substantial support package. Dan Tomlinson noted that the Government will provide £4.3 billion in support over the next three years. This fund is specifically designed to protect ratepayers who face higher bills due to the upcoming property revaluation.
The Treasury stated that as a result of this intervention, over 50% of ratepayers will see no increase in their bills at all. Furthermore, they claim that 23% of ratepayers will actually see their bills decrease. For those properties facing an increase, the rises will be capped. Most will see increases limited to 15% or less next year, with a cap of £800 applied for the smallest properties.
Understanding the 2026 Revaluation
The root of the potential bill hikes lies in the revaluation process. The amount of business rates paid on a property is based on its rateable value (RV), assessed by the Valuation Office Agency (VOA), and a government-set multiplier. RVs are normally reassessed every three years.
The forthcoming revaluation, effective from 1 April 2026, will be based on property values as of 1 April 2024. This is the first revaluation since the COVID-19 pandemic, which has led to significant increases in rateable values for some property types, including many in the hospitality sector as they recover from the pandemic's impact.
The Treasury's announced support package aims to manage the transition for businesses most affected by these updated valuations, ensuring the changes are introduced with what it terms "significant transition relief."
