Retail, hospitality and leisure (RHL) businesses were among the main beneficiaries of Chancellor John Healey’s first Budget this week, with a series of measures aimed at easing the business rates burden in England.
From April 2027, the threshold for Small Business Rates Relief will increase from a rateable value (RV) of £12,000 to £18,000 for qualifying RHL businesses.
The chancellor said this would bring 70,000 extra businesses out of paying business rates altogether – about half of all shops, restaurants, pubs, gyms, cafes and salons. For other RHL businesses that still pay business rates, rates will be frozen in real terms for the next two years.
What the changes could mean for businesses
Louise Sedgwick, Commercial Director at Rightmove, said: “Reducing the immediate business rates burden should give more retail, hospitality and leisure businesses room to invest and plan ahead. The key question will be whether that support gives businesses enough confidence to open new locations, expand their footprint and make longer-term property commitments.”
To help fund the measures, the government said it will raise taxes on gambling, increasing tax for higher stake machines by 25%. There will also be no business rates relief for vape shops or adult gaming centres from April 2027.
Responding to the Budget, John Webber, head of business rates at Colliers, welcomed elements of the announcement but questioned whether the measures went far enough. “The extension of transitional relief/freezing business rates in real terms for another two years for the RHL sector is to be welcomed,” he said.
“One of the big winners will be the hotel industry, many of which would otherwise have seen big rates bills rises due to their large increases in rateable value following the 2026 revaluation. The pubs and music venues are the biggest winners overall, however, gaining the 20% discount and the RHL freeze.”
However, he added: “Whether the chancellor has done enough to prevent further pressures in the sector remains to be seen. Remember these measures are only for two years. Many businesses thinking about opening a pub or hotel, would want reassurance that they would not be hit by big rates bills in two years’ time. So, in that sense the announced measures do little to encourage further investment.”
Longer-term implications for commercial property
Beyond the immediate business rates changes, the Budget also included measures that could have longer-term implications for the commercial property and development industry.
The chancellor set out a fiscal devolution roadmap stating that by April 2027 English mayors will begin retaining 20% of business rates revenues, replacing traditional grant funding. By the end of the decade, local authorities and combined authorities could retain 100% of business rates locally.
The reforms run alongside upcoming plans for mayors to receive a share of income tax receipts from April 2028 and powers to introduce an overnight visitor levy starting in 2028.
Copyright © 2000-2026 Rightmove Group Limited. All rights reserved. Rightmove prohibits the scraping of its content. You can find further details here.
