UK Budget 2025: Business rate rises could increase pressure on high street

Premises with a rateable value of £500,000 or more will see their multiplier increase by 2.8p above the national standard rate.

These changes are scheduled to take effect on 1 April 2026, as part of a broader revaluation tied to updated property values.

Industry specialists note that the new structure could widen the cost gap between physical retailers and online competitors. Smaller RHL properties are expected to face multipliers of 38.2p, with standard properties rising to 43p in 2026–27. Larger properties will see a much higher multiplier of 50.8p, potentially intensifying the pressures already felt on the high street.

To ease the transition, the government has announced a £3.2 billion transitional relief scheme, designed to support major business rates payers—including airports, hospitality operators, and other large property users—as they adjust to higher charges. The aim is to encourage continued post-Covid recovery and maintain economic stability.

However, businesses may still be faced with difficult decisions as they attempt to manage rising costs. Options often include passing increases on to consumers or squeezing suppliers to reduce expenses—both of which carry risks. Supply chains have already been weakened by Brexit and Covid-related disruption, making aggressive cost-cutting measures potentially damaging to product quality, regulatory compliance, and long-term brand reputation.

Experts highlight that businesses should instead consider more sustainable strategies, such as improving operational efficiency, investing in automation, or adopting collaborative supplier models that focus on shared resilience rather than unilateral cuts.

Retailers with a strong omni-channel presence may be better positioned to absorb the impact in the short to medium term. Nevertheless, long-term stability will depend heavily on continued investment in digital capability, technology, and smart optimisation of physical premises.

These changes form part of a wider overhaul of the business rates system, following the government’s interim report released earlier in 2025. As the 2026 reforms approach, businesses across England—particularly those reliant on a physical footprint—will need to plan proactively to mitigate potential challenges and safeguard their financial future.

(Pinsent Masons)