Budget reaction analysis – Chris Grose, rating director at Hartnell Taylor Cook responds to the budget.
Now the Budget is in, Chris Grose, Rating Director and Junior Vice President of the IRRV, shares his initial reaction:
“Yet again, pleas to reform business rates and bring lasting relief to businesses already burdened by high bills have fallen on deaf ears. New, lower multipliers will indeed come into force, with retail, hospitality and leisure (RHL) businesses receiving a further 5p discount on their rate in the pound, while properties with RVs of over £500k are paying for this RHL discount through an additional 2.8p added to their multiplier. It will be little comfort for such businesses that their rate in the pound is falling when, for many, the increase in rateable value will offset this.
Lower Rates, Higher Bills: The Reality for RHL Businesses
“The announcement that small and standard RHL properties will pay the lowest rates since 1990/91 and 2010/11 is being touted as good news. But although the rates are down, the overall rateable value of properties is ever-increasing. This means that ultimately, even despite lower rates, many businesses are likely to be paying more tax on average.
Rising Rateable Values Across All Sectors
“The publication of the draft 2026 Rating List has shown that in all sectors and areas of England and Wales, average RVs have increased between the 2023 and 2026 Lists. The average increase is just under 20%, but this masks big differences: the ‘other’ sector has increased by 28%, industry by just over 20%, offices by just under 15%, and retail by just under 10%. Of course, the rise in retail values suggests there is a risk of the discounted rates simply making higher retail rents possible. The ‘other’ sector includes properties like airports (Heathrow has increased from RV £210m to RV £951m), hospitals, power stations, etc.
2025 Budget: A Move from ‘Slab’ to ‘Slice’?
“Today’s Business Rates and Investment Call for Evidence raises the prospect of a move from a ‘slab’-based approach on the rate in the pound to a ‘slice’ approach, as outlined in the government’s interim business rates report. Such a change would remove some of the cliff edges in the system and provide some relief to those with RVs in excess of £500,000 who are facing an ever-increasing share of the rates burden.
“The big winner in all this is the Chancellor, who has successfully offloaded RHL relief from the government’s books by making properties with higher RVs pay for it.”
Unlocking long-term relief
“To unlock the door to long-term relief, the government must stop dithering and commit to major property tax reform by carrying out a revaluation of council tax. The introduction of a council tax surcharge on properties worth over £2 million goes some way towards getting high-value residential properties to contribute their fair share to property tax income, but it does not address the whole problem.
Mid-to-Low Value Properties Still Carry the Burden
“However, it does not fully change the fact that it is mid-to-low-value properties which bear the brunt of taxation. It is only by resolving this and implementing full property tax reform that we can finally unlock the door to long-term relief and enable a reduction in business rates.
“Fundamentally, business rates are an efficient tax with high collection rates (97.3% in 2024/25), but there is a need to ensure the revenue raised from them reflects the economic realities of ratepayers.”
Chris Grose is Rating Director at Hartnell Taylor Cook. We create bespoke strategies to save money for our clients in the short and medium term. We draw on our extensive database of evidence, case law and statute to deliver results for every type of commercial property. For rates advice please contact Chris, or see the full list of our rating capabilities HERE.
