£420m Cut in Support as Pubs and Restaurants Face 40%–65% Business Rates Rise
Pubs, restaurants and small shops in England are facing steep business rate rises from next April after the Autumn Budget delivered far less generous support for high street operators, whilst the 2026 Revaluation revealed sharp increases in rateable values.
The Government has confirmed that the current 40% Retail, Hospitality and Leisure (RHL) discount, capped at £110,000 per business, will end on 31st March 2026 and replaced by a new system in which RHL multipliers are set 5p lower than the standard rate with no cap in financial support.
Analysis by global tax firm Ryan shows this represents a significant reduction in high street support in England:
- The current 40% RHL discount will cost the Exchequer £1.385 billion in 2025/26.
- The new 2.8p high value surtax on properties with a rateable value above £500,000 will raise £965 million in 2026/27 for high street support.
- This represents a £420 million reduction in support available for high street firms when comparing 2025/26 with 2026/27.
Steep rises for typical high-street premises
Small shops
The average small shop’s rateable value increases from £17,168 to £19,145 under the 2026 Revaluation, a rise of 12%.
- 2025/26 bill after 40% discount: £5,139.79
- 2026/27 bill after 5p RHL multiplier cut: £7,313.39
- Annual increase: £2,173.60 (+42.3%)
Pubs
The average pub sees a 30% increase in rateable value from £30,945 to £40,245.
- 2025/26 bill after 40% discount: £9,264.93
- 2026/27 bill after 5p RHL multiplier cut: £15,373.59
- Annual increase: £6,108.66 (+65.9%)
Restaurants
Average restaurant rateable values rise 14%, from £39,945 to £45,372.
- 2025/26 bill after 40% discount: £11,959.53
- 2026/27 bill after 5p RHL multiplier cut: £17,332.10
- Annual increase: £5,372.57 (+44.9%)
Cap on the new ‘surtax’ reduces available funding
Legislation allowed the Chancellor to set a new high value supplement at up to 10p above the standard rate of tax. Instead, the Government opted for 2.8p, which Ryan says protects the largest properties from much heavier tax rises but materially limits the funding available to reduce the RHL multipliers.
Alex Probyn, Practice Leader for Europe & Asia-Pacific Property Tax at Ryan, said:
“The new RHL lower multipliers deliver a real-terms cut of just 10% to 12% for shops, pubs and restaurants compared with the 40% discount. And because the new system removes the £110,000 cap on relief, portfolio operators will now benefit from support, but small and independent businesses will receive far less help. The combination of rising rateable values and much lower relief means business rates bills will rise sharply for small and independent operators next April.”
“The Government’s decision to limit the high value surtax significantly reduces the funding available for high street support given the transfer in funding, compounding the wider cost-of-doing-business crisis. But the much smaller surtax than expected will see the largest properties across all sectors in England breathing a sigh of relief, having avoided the full supplement permitted in legislation.”