This aims to reform relief for retail, hospitality, and leisure businesses by offering up to 40% off rates bills for properties with a rateable value up to £51,000. This relief will be funded by a tariff on properties with a rateable value of £500,000 or more, affecting various property types including offices, distribution centres, factories, schools, and hospitals.
The House of Lords suggested exemptions for certain properties like hospitals and manufacturing sites, but the Government declined, stating exemptions could be applied individually if necessary.
Currently, 16,780 properties in England have rateable values of £500,000 or more, representing 0.84% of commercial properties but nearly 60% of the total rateable value. Conversely, 442,430 retail properties with values below £51,000, accounting for 4.69% of the total rateable value, will benefit from the relief.
Among the large properties facing the tax increase, 20% are in retail, 27% are offices, 25% are industrial, and 28% are classified as 'other'. These statistics are based on the 2023 Rating List. With a revaluation due from 1 April 2026, and with generally rising office and industrial rents, but falling retail rents in some areas, more retail properties may drop below the threshold to become eligible for relief, while more properties may move into the larger category and face increased rates.
The Government is seeking ways to avoid 'cliff edges' where properties move out of the relief zone or into the large property supplement zone. Removing these cliff edges is seen as crucial. They act as a disincentive to growth and property improvements and mean that the largest properties could be paying over 60% of their rateable values in business rates next year, which is an eye watering milestone to reach.
Future charges will likely be clarified in the Autumn Statement, expected in late October or early November 2025.
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