Business rates reform 2026: what it means for the high street

Business rates reform in 2026 is shaping up as one of the sharper arguments on the high street ahead of the Budget on Wednesday 28 October. The Retail Jobs Alliance (RJA), which includes Asda, Kingfisher, Morrisons, Marks & Spencer, Primark, Sainsbury’s and Tesco, has called on the government to exempt every bricks-and-mortar shop from the higher business rates multiplier introduced at last year’s Autumn Budget. Nothing has been announced, but the warning is that any further rise would land on shops already under pressure.

This piece sets out what is being argued over, who could pay more or less, what the numbers look like for one small business, and the steps you can take before the chancellor speaks.

The business rates changes the government is being asked to weigh

A business rates bill is based on a property’s rateable value, according to the East Midlands Combined County Authority. Your local authority calculates and collects the bill, and it applies to most non-domestic properties. The government has not said it will raise rates on shops, and the Treasury had not commented on the wider Budget pressures when the Guardian reported on Thursday 15 October.

What has happened is a round of lobbying. The chancellor met retail chief executives on Tuesday for pre-budget talks, according to Talking Retail. Delegates at Labour’s conference passed a motion tabled by the Usdaw union urging ministers to exempt all bricks-and-mortar shops from the higher multiplier. The Confederation of British Industry has separately called for changes to business rates, alongside cuts to employer national insurance and business electricity costs, the Guardian reported.

The RJA says about 4,000 stores sit above the £500,000 rateable-value threshold, and one in three retail workers are employed in them. It also says a further rise in the higher multiplier would leave large stores less able to protect jobs, hold down prices and invest in their communities.

Who pays more and who pays less

The argument is partly about fairness between sectors. Usdaw general secretary Joanne Thomas welcomed action already taken to reduce business rates for pubs, clubs and live music venues. Kim Johnson, Labour MP for Liverpool Riverside, agreed that was right, but said “retail can’t be left picking up the bill for it”.

The RJA claims retail already pays a share of business rates more than four times its contribution to UK GDP, and that the previous Autumn Budget added around £7bn in new costs and taxes to the sector. It warns that easing the burden on hospitality while raising it on retail risks weakening the town centres the government wants to support. Large stores often act as anchors, it says, drawing the footfall that sustains surrounding businesses.

The RJA also points to a jobs projection. Research by the consultancy WPI Strategy for the RJA predicts that, even with no further changes, existing cost pressures could cost the sector around 90,000 jobs by 2031. The figure projects forward the fall in retail employees in HMRC and ONS data since 2023. Martin Beck, WPI Strategy’s chief economist, said further increases “would inevitably affect their ability to protect jobs, invest in stores and keep prices down”.

Smaller shops are in a different part of the debate. The Federation of Small Businesses (FSB) wants more relief, not just no rise, and is asking the chancellor to lift the Small Business Rates Relief threshold. That would cut bills for the smallest premises rather than shield the largest.

A worked example: business rates for small shops in 2026

Small Business Rates Relief currently gives a 100% discount on properties in England with a rateable value of up to £12,000, tapering to £15,000, according to Startups.co.uk. The FSB says those thresholds have barely moved in almost a decade and wants them raised to £25,000, which it says would take at least 250,000 more firms out of rates altogether.

David Norman, founder of sofa bed maker Furl, shows how uneven the bill can be. His business has 21 staff across four sites, including a Nottingham workshop and two London showrooms. Its rates bill comes to about £108,000 a year, and relief brings it to about £91,000, a saving of roughly £17,000. The Watford unit still pays the full £38,000 with no relief.

The monthly figures are our own division of the annual amounts. Mr Norman said that if the threshold rose and more sites qualified, he would put the money into staff, starting with another maker in the workshop. The FSB found that 28% of small employers would take on staff if the threshold rose, and 26% would put the savings into pay or benefits.

What to do now

You cannot influence the Budget, but you can check your own bill. Because the bill is based on rateable value, an error costs you every year. You can query the figure through your local Valuation Office Agency office using your business rates valuation account, free of charge. If you use a rating agent to challenge it, the government website carries advice on appointing one.

Check each site separately, because relief varies by property. Furl gets relief on three of its four sites, so one decision does not cover them all. Then ask your council which reliefs apply, as it bills the rates. Relief may also be available if you are in financial difficulty, or if the property is empty, partly empty or being refurbished, and some properties are exempt. If the council refuses relief, ask why, and you may be able to apply again with more evidence.

Keep an eye on Wednesday 28 October. If the Budget changes the multiplier or the relief thresholds, your council would be the first place to confirm what applies to your premises.

Your questions answered

What changes are coming to business rates?

None are confirmed in the sources we have seen. Retailers and Usdaw want shops exempted from the higher multiplier, the FSB wants the small business relief threshold lifted to £25,000, and the CBI has called for changes to business rates. The chancellor will set out the government’s plans on 28 October.

How much are business rates for a small shop?

It depends on the shop’s rateable value, which your council uses to set the bill. In England, a property with a rateable value of up to £12,000 can get a 100% discount under Small Business Rates Relief, with tapered relief up to £15,000. Above that, check your bill or ask your council, as the sources here do not give the multiplier.

What are the new business rates for small businesses in 2026?

The sources do not set out new rates for small businesses. The FSB says the relief thresholds have been unchanged for almost a decade. Any alteration would depend on the Budget on 28 October and on what the government then confirms.