Budget 2026: What the New £18,000 Small Business Rate Relief Threshold Saves Shops, Pubs and Cafés

In September we ran the numbers on a reported plan to raise the Small Business Rate ReliefA discount for smaller properties. Below a certain Rateable Value you pay nothing at all; above that there's a sliding-scale ('tapered') discount up to a higher threshold. threshold from £12,000 to just above £17,000 (see our earlier post). The Budget on 28 October went further, to £18,000, with relief tapering to nothing at £21,000. But there was a catch that none of the reports mentioned: the higher thresholds apply only to qualifying retail, hospitality and leisureLower rates in the pound for qualifying shops, pubs, restaurants, cafés, gyms, hotels and similar. Since 1 April 2026 this is a lower multiplier rather than a relief — there is no claim form, and your council decides who qualifies from its record of how the property is used. (RHL) properties. Every other small business stays on today’s £12,000 and £15,000 thresholds.

This post updates our September figures with the actual numbers. For every other business rates change in the Budget, read our summary of the Autumn Budget 2026 business rates changes.

What the Budget actually changed

• Full relief now runs up to a rateable valueThe official estimate of a property's annual rental value on a fixed valuation date. Your rates bill is based on this figure, not on what you actually pay in rent. of £18,000, up from £12,000. Relief then tapers evenly to nothing at £21,000, up from £15,000.
• It applies only to qualifying retail, hospitality and leisure properties in England.
• It starts on 1 April 2027 and runs until 31 March 2029. The government says the thresholds will be reviewed at the 2029 revaluation.
• The limit on second properties is relaxed for every business that gets the relief, not just RHL. The total rateable value of all your properties must now be below £30,000 (strictly, £29,999 or less) anywhere in England, replacing today’s £20,000, or £28,000 in London.
• Vape shops lose Small Business Rate Relief altogether. Adult gaming centres keep it, but stay on the old £12,000 and £15,000 thresholds.

What it saves, rateable value by rateable value

The table shows the yearly saving for a business occupying one RHL property, at each rateable value from £12,000 to £21,000. We have used the 2027/28 small business RHL multiplier of 39.5p, published with the Budget, because the change starts in April 2027. In September we used this year’s 38.2p, so these savings are a little higher than the ones we published then.

Savings start at about £1,712 a year for a property valued at £13,000, reach £7,110 at exactly £18,000, and fall through the taper to £2,633 at £20,000. At £21,000 and above nothing changes.

What counts as retail, hospitality and leisure?

RHL is the government’s category for businesses that serve visiting members of the public in person. Since April 2026, qualifying RHL properties have paid lower multipliersThe pence-in-the-pound rate the government sets each year. Your rates bill is roughly Rateable Value × multiplier, before any reliefs are applied., 5p in the pound below everyone else. The same legal definition now decides who gets the higher relief thresholds. To qualify, a property must be wholly or mainly used for a qualifying purpose and be open to visiting members of the public. Typical examples:

• Retail: high street shops, convenience stores, showrooms, garden centres, farm shops, kiosks and market stalls, and services such as hairdressers, barbers and beauty salons.
• Hospitality: pubs, bars, restaurants, cafés, takeaways, hotels, guest houses and B&Bs.
• Leisure: gyms, cinemas, bowling alleys, snooker halls, nightclubs, tennis clubs and visitor attractions.

Some uses are specifically left out: banks and other financial services, medical services, professional services such as solicitors, accountants and estate agents, betting shops, car parks, transport hubs and warehouses serving online sales. Offices, workshops and industrial units are not RHL either, which is why most small businesses away from the high street gain nothing from this change.

Your council decides whether a property is RHL, from its own record of how the property is used. There is no application form. If your business rates bill does not show the retail, hospitality and leisure multiplier, ask your councilYour local council — the body that actually sends your bill and collects payment, using the Rateable Value the VOA has set. why. It is likely to matter for the new thresholds too.

How many properties gain, and what it costs

We hold the full England rating listThe public register listing every business property's Rateable Value. The current list is the '2026 list', based on rental values from 1 April 2024.. It contains 119,556 retail, hospitality and leisure properties with a rateable value above £12,000 and below £21,000, the band this change reaches. 93,887 of them are valued at £18,000 or less and would pay nothing at all. The other 25,669 sit in the taper and would get partial relief.

If every one of those properties were occupied by a business with only one property, the change would cost about £509m a year in England, an average of £4,260 per property. Over the two years it runs, April 2027 to March 2029, that is just over £1bn.

That is the upper limit. Small Business Rate Relief only goes to businesses that occupy one property, or whose other properties are very small, and it does not apply to empty premises. The government expects 70,000 more businesses to pay nothing, against the 93,887 properties we count between £12,000 and £18,000. That suggests the real number is up to about 25% smaller once chains, multi-site operators and empty units are taken out. The same gap appears for every type of property the government has published figures for.

The Treasury’s own costing is £315m in 2027-28 and £320m in 2028-29, about £635m over the two years. That is lower than our £509m a year partly for the same reason, and partly because the Treasury nets off the extra corporation tax and income tax businesses pay when their business rates bill falls, so the two figures are not directly comparable. Taking 25% off our figure gives about £382m a year before that tax effect.

How it will work

• England only. Business rates are devolved, so the change does not apply in Wales, Scotland or Northern Ireland.
• It starts on 1 April 2027, so it should first show on the business rates bills for 2027/28 that councils send out next spring. It ends on 31 March 2029 unless it is renewed at the 2029 revaluation.
• It is still Small Business Rate Relief, with the same rules. The business must occupy one property, or its other properties must each be small (today, a rateable value of £2,899 or less) with the total below the new £29,999 limit. The Budget does not say the £2,899 figure changes. If you take on a second property, you keep relief on the first for a grace period of up to three years.
• Empty properties do not get it. Vape shops are excluded altogether, and adult gaming centres stay on the old thresholds.
• Will you need to apply? The government has not said yet. It says the regulations and guidance will follow “in the coming weeks”. Under today’s rules Small Business Rate Relief has to be claimed from your council, although many councils apply it automatically once they know a business has only one property. Our expectation, until the guidance says otherwise: if you already receive the relief, the higher thresholds should follow through the same claim; if you do not get it today because your rateable value is above £15,000, you should contact your council to claim it. We will update this post when the guidance is published.

What about Wales?

This is an England-only change. In Wales, business rates relief is set by the Welsh Government, and its small business rates relief already works differently: 100% relief up to a rateable value of £6,000, tapering to nothing at £12,000, and a business can claim it on up to two properties in each council area. The Welsh Government said on Budget day that it would consider the implications as it finalises its own Budget, which it will publish on 17 November 2026, with the final Budget due on 16 February 2027. Any change for Welsh shops, pubs and cafés would be announced then, and we will cover it when it is.

What it means for your business

Whether you gain, and by how much, depends on your rateable value. A café valued at £19,000 gets two-thirds relief from April 2027; one valued at £18,000 pays nothing. With thousands of pounds a year now turning on a few hundred pounds of rateable value, the accuracy of the figure the Valuation OfficeThe government body that sets every property's Rateable Value. From April 2026 the VOA is part of HMRC (see below), but 'VOA' is still the common name for the valuation side of the work. has given your property has never been worth more. Check your rateable value against similar properties nearby.