Business rates and the need for reform
This blog was written as part of the 2025 Birmingham Economic Review, an annual report produced by University of Birmingham/City-REDI in partnership with the Greater Birmingham Chambers of Commerce. Read the full report.
By John Webber, Head of Business Rates at Colliers
Business rates in the UK have long been a source of frustration for companies across all sectors. Despite repeated political pledges, meaningful reform remains out of reach. As the government enters its second year, businesses are grappling with rising costs, mounting uncertainty, and a tax system increasingly disconnected from economic realities.
At the heart of the issue is the business rates multiplier—a figure used to calculate rate liabilities. Colliers has consistently advocated for a rebasing of the multiplier to a more affordable level, such as 35p in the pound. Instead, the government has opted for superficial adjustments, prioritising soundbites over substance while maintaining its high-tax, high-spend agenda.
A Complex System Made Worse
From April 2026, the Non-Domestic Rating (Multipliers and Private Schools) Act will introduce five new multipliers based on rateable value (RV), designed to counter the impact of totally removing the Retail, Hospitality and Leisure (RHL) reliefs for smaller RHL businesses. While these businesses may benefit from lower multipliers, larger properties - those with RVs over £500,000 - will face steep increases to fund this.
Anchor retail and supermarket tenants like Tesco or Sainsbury’s, which drive footfall and support local economies, are expected to pay over £400 million more in business rates annually. This cost will inevitably ripple through supply chains and contribute to inflation.
In London’s West End alone, 451 retail, hospitality, and leisure properties will be hit with the highest multiplier. Similar patterns are expected in other cities, where flagship stores and entertainment venues serve as economic anchors. Penalising these businesses risks undermining high street ecosystems and reducing consumer choice.
The impact extends beyond retail: larger offices, industrial sites, distribution centres and even schools, and hospitals will also bear the brunt of the higher multiplier and thus higher rates bills, stunting investment and growth.
Revaluation and Rising Liabilities
The 2026 revaluation will be based on April 2024 rental values, replacing pandemic-distorted data. With retail rents rebounding, RVs in prime locations could rise by 20–30 per cent. For West End retailers, annual liabilities may jump from £212 million to £274 million—an average increase of £180,000 per site.
London office properties are projected to see a nine percent hike, adding £432 million to rate bills across the boroughs.
Administrative Burdens and Appeals Chaos
The Valuation Office Agency’s appeals system is overwhelmed. As of mid-2025, two thirds of the 35,910 Challenges lodged against the 2023 list remain outstanding. And the VOA is expecting around 150,000 new Checks to enter the system by April 2026. Businesses seeking redress face long delays, compounding uncertainty and eroding trust.
New reporting rules will start to be rolled out and trialled from April 2026 becoming mandatory from 2029. These will require ratepayers to report changes in occupancy, leasing, and property use. These rules risk confusing smaller operators and exposing them to rogue agents to navigate the ever-complex system.
Reform Must Go Further
The government’s “Transforming Business Rates” consultation offers modest proposals but avoids core issues. Empty Property Relief and revaluation frequency remain unchanged. The merging of the Valuation Office Agency into HMRC in 2026 also raises concerns about impartiality.
Far from reducing the burden of business rates, they only seem to be going one way. Up!
According to latest OBR projections, business rates are projected to raise nearly £40 billion annually by 2029–30. Without substantive reform, high streets will continue to decline, investment will stall, and businesses will face a growing tax burden. The need for genuine, comprehensive reform has never been more urgent.
