Treasury Modelling Shows £1.8 Billion Expected in Business Rates Refunds

The government expects around £1.8 billion to be refunded back to ratepayers in England following the 2026 business rates revaluation, according to official modelling disclosed under the Freedom of Information Act to global tax firm Ryan.

Data underpinning the 2026 multipliers setting process shows ministers have forecasted a £3.59 billion reduction in rateable value (RV) on the 2026 local rating lists as a result of successful Check, Challenge, and Appeal (CCA) cases, according to analysis from Ryan.

Under the statutory framework, multipliers for a revaluation year must be set only after allowing for expected successful appeals. The modelling therefore assumes significant correction to the tax base over the life of the list.

However, the timing profile indicates that much of the rebates are expected to arrive later in the cycle.

Analysis of the data procured by Ryan reveals only 8% of total RV correction is forecast in 2026/27, rising to 13% in 2027/28. By contrast, 25% is forecast in 2028/29 and 38% in 2029/30, which is equivalent to £1.33 billion of RV reduction in that year alone. A further £480 million is projected in 2030/31 and £60 million in 2031/32 and 2032/33.

Nearly half of the total £3.59 billion RV correction is not expected to crystallise until the first two years of the next revaluation period.

Alex Probyn, Principal and Practice Leader for Europe and Asia-Pacific Property Tax at Ryan, said:

“If a large proportion of adjustment is forecast to fall into the next rating cycle, then that has implications for certainty and planning.

Business rates liabilities feed directly into investment and capital expenditure decisions. Timely resolution matters.”

The government is currently consulting on the future direction of business rates through its ongoing Call for Evidence, framed around ensuring the system better supports growth and stability.

Probyn added: “The allowance for correction is already built into fiscal planning. Earlier resolution would not alter that; it would provide clarity sooner.

If the objective is to align the system with growth and investment, the speed of outcomes under CCA is an important consideration.”

The disclosures come ahead of the 31 March deadline to lodge Checks against 2023 list assessments.

A successful 2023 challenge can deliver backdated savings across three financial years and may also influence transitional relief calculations in the 2026 cycle, as capped increases are derived from 2025/26 liabilities based on the 2023 assessment.

Probyn said: “There is a clear ‘use it or lose it’ dynamic. Ensuring the 2023 assessment is accurate is not only about recovering past overpayments but it can shape tax liabilities in the next list.”