Business rates ‘double hit’ to cost English firms £2.5bn

Businesses the length and breadth of England are “staring down the barrel” of a £2.5bn hike in property taxes from April 2026, as inflation and a new government stealth tax will combine to drive up business rates bills, according to analysis by global tax firm Ryan.

A nationwide revaluation of business rates will take effect from 1 April 2026, resetting rateable values to reflect the property market at 1 April 2024. Revaluations are revenue neutral at a national level — meaning the overall tax take remains broadly unchanged, with bills redistributed between sectors and regions depending on relative rental performance.

However, even in a revaluation year, the total business rates yield rises in line with inflation. Each September, the Consumer Prices Index (CPI) sets the increase for the following financial year. Earlier this month, the Bank of England cut interest rates for the fifth time this year but warned that climbing food prices would push inflation higher in 2025.

The bank now forecasts CPI at 4% in September 2025, up from a previous estimate of 3.75% and 3.8% in the 12 months to July 2025. That increase alone would add £1.11bn to the business rates burden in England according to analysis by Ryan.

On top of this, from April 2026 the Government will introduce a supplementary multiplier of up to 10p on properties with a rateable value above £500,000 — estimated to affect 17,000 properties nationwide.

This measure is designed to fund permanently reduced multipliers for retail, hospitality and leisure premises but, in practice, transfers the £1.38bn annual cost of current high street discounts from the Exchequer onto larger ratepayers.

Alex Probyn, practice leader of Property Tax, Europe and Asia-Pacific, at global tax firm Ryan, 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 the UK’s competitiveness at a critical time for the economy.”

Ryan also said the UK already holds the “unenviable accolade” of having the highest property taxes across the entire developed world, the equivalent of 3.7% of property taxes-to-gross domestic product (GDP) in 2024.

The UK’s property tax-to-GDP ratio is much higher than the 1.7% average across the developed world and the 2.7% average for the group of seven (G7), the informal grouping of seven of the world’s advanced economies.

Probyn added: “Businesses should use the months ahead to review their property portfolios, model the potential impact of likely new values, and be ready to act quickly once the draft rating list is published in the Autumn. Early preparation is key to managing outcomes effectively.”

The 2026 revaluation, including the final level of the multipliers, will be confirmed in the Autumn 2025 Budget, ahead of bills landing the following spring. Business rates are devolved to Scotland, Wales and Northern Ireland.