Business Rates “Double Hit” Set To Cost £2.5Bn

Businesses in England are set to face an “unavoidable double hit” to property tax payments in the next financial year, which will see total payments rise by about £2.5 billion, according to new figures.

Figures from the global tax consultancy Ryan indicate that a mix of inflation and government reforms to the business rates system will add to the financial strain on companies already battling higher costs.

Business rates are devolved in Scotland, Wales and Northern Ireland but remain a central issue for firms in England particularly high street retailers, leisure businesses and manufacturers.

From April 2025, bills will be recalculated based on property values assessed in April 2024.

The revaluation is intended to be revenue-neutral nationally, but the burden is redistributed across sectors and regions depending on how values shift.

However, overall yields will still rise in line with inflation.

The September reading of consumer price index (CPI) inflation is used to set next year’s increase, and the Bank of England has forecast a climb to around 4%. Ryan estimates this alone would add £1.1bn to the business rates burden in England.

In addition to this, a supplementary multiplier of up to 10p will be applied from April 2026 on properties valued above £500,000, which will shift an expected £1.38bn of costs from government-funded retail and hospitality reliefs onto larger ratepayers.

About 17,000 businesses are expected to be affected.

Alex Probyn, Ryan’s practice leader of property tax for Europe and Asia-Pacific, said:
“The 2026 revaluation itself is a redistribution exercise, but when you layer on both inflation and the new supplementary multiplier, businesses are left staring down the barrel of an unavoidable double hit. Larger occupiers in particular will shoulder a disproportionate burden. With the UK already having the highest property taxes in the developed world, this £2.5bn increase risks undermining competitiveness at a critical time for the economy.”

In July UKHospitality’s CEO Kate Nicholls, warned that hospitality businesses are being “taxed out of existence,” with the industry losing 69,000 jobs in just seven months since October 2024, and called for a significant reduction in business rates for hospitality businesses with a rateable value under £500,000, and exemption for larger premises from new surcharges, to help revive high streets.