Business rates revaluation: what it means for high street businesses and landlords

What changed on 1 April 2026?

A major business rates revaluation took effect on 1 April 2026, increasing costs for many high street premises. Industry commentary has warned that the additional burden may lead some hospitality businesses to cut jobs and, in some cases, close, particularly where firms are still managing legacy pandemic debts. High street retailers are also under pressure, with the sector reported to pay a disproportionate share of overall business rates relative to its share of the wider economy.

Why is this revaluation causing such concern?

For many occupiers, business rates are a significant fixed overhead. Where bills rise sharply, businesses may face increased cashflow strain and reduced resilience, especially in sectors like retail and leisure which are already dealing with higher operating costs.

What reliefs has the Government offered?

The Government has announced relief measures, including:

• a 5% tax cut for retail, hospitality and leisure premises with a rateable value under £500,000; and
• a 15% rates discount for pubs and music venues.

Even with these measures, many high street businesses will still see rate bills increase by thousands of pounds.

How can higher business rates affect landlord–tenant relationships?

Commercial leases typically pass business rates liability to the tenant. Where rates increase abruptly, this can place pressure on the landlord–tenant relationship and may contribute to:

• disputes around affordability and ongoing occupation;
• increased default risk; and
• downward pressure on rent in practical negotiations.

What happens if a tenant leaves and the property becomes empty?

If a tenant terminates the lease, enters liquidation, or the lease is disclaimed and the premises are left vacant, landlords can face business rates exposure once any empty property relief period has expired (usually no more than three months). In practice, this can mean landlords may become responsible for business rates on void premises after that relief period ends.

Can businesses still challenge their rateable value?

Yes. There are tight deadlines, but businesses can:

• check the property’s valuation using the Valuation Office Agency (“VOA”) website; and
• challenge an excessive valuation through the “Check, Challenge, Appeal” process.

Deadlines apply at each stage of the VOA’s Check, Challenge, Appeal process and can vary depending on the property and the type of valuation issue. Businesses should log into the VOA service promptly to confirm the specific time limits shown for their property and seek advice early where there is a risk of missing a cut‑off.

This route allows businesses to contest their 2026 rateable values where they consider them to be unreasonably high.

What else should businesses do right now?

Businesses should ensure they have claimed any reliefs for which they remain eligible. Examples include:

• small business relief;
• transitional relief; and
• other local rates relief schemes (where available).

Are there proposals to replace or reform business rates?

Business rates are often criticised as a tax on operating from premises, which can favour online retailers and contribute to further voids on the high street. The policy debate has prompted discussion of more radical reform.

What alternative models are being discussed?

Two ideas raised in current debate include:

• a land value tax (LVT), which would tax landowners based on unimproved land value rather than tenants on property value (currently supported by the Green Party); and
• a tiered “slice” model, applying higher rates only to the portion of value above certain thresholds (instead of a flat “slab” rate).

Both approaches involve trade-offs and significant transition challenges. For example, a move to LVT could reduce disincentives to improve property, but implementation would be complex and costs might still be passed through commercially. A slice model could soften sudden spikes, but fair banding and revenue neutrality would be difficult to design.

Key takeaways

• Check your 2026 rateable value and act quickly if it appears too high (deadlines apply).
• Ensure you are claiming all available reliefs, including any local schemes.
• Rising rates can affect lease affordability and void risk; early advice can help manage exposure.

If you have questions or concerns, please contact Property Litigation partner Ed John.