If you run a shop, cafe, restaurant, gym or salon, the Autumn Budget 2026 changed one of your biggest fixed costs. From 1 April 2027, qualifying retail, hospitality and leisure properties in England will get full Small Business Rates Relief on rateable values up to £18,000, up from £12,000 today. The Chancellor said the change takes around 70,000 more businesses out of business rates altogether, so that about half of all shops, restaurants and gyms will pay no business rates at all.
That headline is good news, but it is not the whole story. The higher threshold applies to qualifying properties only, the relief tapers away rather than stopping overnight, and some premises are now excluded entirely. This guide explains who qualifies, how much you actually save, and what to check before April 2027.
What business rates are, in plain English
Business rates are a tax on non-domestic property, charged by your local council and based on your property’s rateable value. The rateable value is set by the Valuation Office Agency and is meant to reflect the annual rent your property could command on the open market. Your bill is broadly your rateable value multiplied by a government-set multiplier, minus any relief you qualify for.
That last part matters more than the multiplier. Reliefs can wipe out a bill entirely, halve it, or leave it untouched, and two neighbouring businesses with similar rents can pay very different amounts because of them. Small Business Rates Relief is the main relief for small premises, and it is the one the Budget changed.
What changed in the Autumn Budget 2026
Chancellor John Healey announced the changes in his first Budget on 28 October 2026. For qualifying retail, hospitality and leisure properties in England, from 1 April 2027:
- Full relief threshold rises from a rateable value of £12,000 to £18,000. At or below £18,000, you pay no business rates on that property.
- Tapered relief rises from £15,000 to £21,000. Above £18,000, relief falls away gradually until it reaches zero at £21,000.
- Extra relief for pubs, social clubs and live-music venues rises from 15% to 35%, from 1 April 2027. Venues with a rateable value of £1 million or more are excluded and keep the existing 15% relief.
- Bills for qualifying retail, hospitality and leisure properties are frozen in real terms for 2027/28 and 2028/29, meaning increases are capped at inflation.
- The thresholds will be reviewed at the 2029 revaluation.
The package is funded in part by higher taxes on gambling machines and by making online marketplaces collect VAT from sellers above £90,000 per platform from October 2027. That funding side does not change your rates bill, but it explains why the relief is targeted at high-street sectors rather than every small business.
Worked examples: what the new thresholds mean for you
The taper is the part most coverage skips, so here is how it works in practice. These are approximate illustrations based on the announced thresholds; your council applies the exact calculation to your bill.
A cafe with a rateable value of £16,000: under the old rules it received only partial, tapered relief. From April 2027 it falls below the new £18,000 threshold, so it pays no business rates on that property at all. For a small cafe, that can be several thousand pounds a year back in the business.
A restaurant with a rateable value of £19,500: it sits inside the new taper zone between £18,000 and £21,000. It still gets relief, but only part of it — roughly half, since £19,500 is halfway through the taper band. Its bill falls, but it does not disappear.
A gym with a rateable value of £25,000: it is above the taper ceiling, so it gets no Small Business Rates Relief. It does, however, benefit from the real-terms freeze on bills for qualifying properties in 2027/28 and 2028/29, which caps how fast its bill can rise.
A pub with a rateable value of £40,000: no Small Business Rates Relief either, but its separate retail, hospitality and leisure relief rises from 15% to 35% from April 2027, cutting its bill by more than a fifth before any other relief is applied.
The lesson is simple: do not assume the headline £18,000 figure means your bill is zero. Find your rateable value first, then see which band you fall in.
Who qualifies — and who does not
Qualifying retail, hospitality and leisure use is the key test for the new thresholds. Shops, restaurants, cafes, pubs, gyms, salons and similar high-street premises are the intended beneficiaries. The relief is for England only; Scotland, Wales and Northern Ireland run their own business rates systems with different rules and thresholds.
Two exclusions were confirmed in the Budget. Vape shops and adult gaming centres are carved out of retail, hospitality and leisure relief and Small Business Rates Relief from April 2027. If your premises fall in either category, do not budget for relief you will not receive.
There is also a long-standing condition that catches out growing businesses: Small Business Rates Relief is designed for a business occupying one main property. Occupying additional properties can affect your eligibility, depending on their rateable values. If you have opened a second site, or you are about to, check the position with your council before you assume both premises qualify.
Businesses outside retail, hospitality and leisure — offices, workshops and warehouses, for example — are not covered by the new £18,000 threshold. They remain under the existing Small Business Rates Relief rules, so check your council’s guidance rather than applying the Budget headline to your premises. If you are unsure which category your property falls in, your council’s business rates team can confirm it; the property’s use class on the valuation record is the starting point.
What to do before April 2027
The changes do not take effect until 1 April 2027, which gives you five months to get your position right. Work through this checklist:
- Find your rateable value. Search the Valuation Office Agency rating list for your property, or check your latest rates bill. This one number decides which band you are in.
- Check your bill, not just the announcement. Relief is normally applied by your council, but bills contain errors. If your rateable value is £18,000 or below and you are a qualifying retail, hospitality or leisure business, your April 2027 bill should reflect full relief.
- Tell your council if your circumstances changed. A change of use, an extension, or a second property can all affect relief. Volunteering the information now beats a backdated bill later.
- Rework your 2027/28 budget. If your bill drops to zero, that saving is real cash flow — but remember the thresholds are reviewed at the 2029 revaluation, so do not treat a rates saving as permanent when you sign a long lease or take on staff. If you are opening a new site, also check the cost of starting a business alongside the rates saving.
- If you are above the taper, use the freeze. A bill capped at inflation for two years is still a saving against the rises you might otherwise have faced, and it makes pricing and wage decisions for 2027 easier to plan.
- If you sell online as well as from premises, note the separate marketplace VAT change from October 2027. It does not affect your rates, but it does affect how VAT is collected on your marketplace sales, so check the VAT registration threshold and Making Tax Digital requirements in the same 2027 planning round.
The honest caveat
Trade bodies welcomed the threshold rise while warning that it does not solve the wider cost pressures on hospitality and retail. The National Living Wage rises by 3.9% to £13.21 from April 2027, employer National Insurance remains higher than it was two years ago, and energy costs are still volatile. Rates relief helps, but for many operators it offsets only part of those increases.
That is precisely why the checklist above matters. The businesses that benefit most from this Budget are the ones that check their rateable value, confirm their relief on the actual bill, and bank the saving deliberately — into a rent buffer, a wage budget, or a refurbishment — rather than discovering it by accident in April.
Frequently asked questions
Does the £18,000 threshold apply across the whole UK?
No. Business rates are devolved. The Budget changes apply to England. Scotland, Wales and Northern Ireland have their own relief schemes, so check the relevant scheme if your premises are outside England.
I run a shop with a rateable value of £17,000. Will I really pay nothing?
If your property qualifies as retail, hospitality or leisure use and the property is your main qualifying property, then from 1 April 2027 you should receive 100% Small Business Rates Relief and pay no business rates on it. Confirm it on your April bill and query it with your council if it does not appear.
My rateable value is £20,000. Do I lose all relief?
No. Between £18,000 and £21,000, relief tapers away gradually. At £20,000 you still receive partial relief; it reaches zero only at £21,000.
Do I need to apply for Small Business Rates Relief?
In most cases your council applies it once it holds your details, but you should not assume. If relief is missing from your bill, contact your council’s business rates team and ask them to check your eligibility.
What if my business is not retail, hospitality or leisure?
The new £18,000 threshold does not apply to you. Check the existing Small Business Rates Relief rules for your property type with your council, and look at other Budget measures — such as corporation tax rates and the trading allowance rise — that may matter more for your business.
The bottom line
The Autumn Budget 2026 gives qualifying small high-street businesses a genuine saving: full relief up to £18,000 of rateable value, tapered relief to £21,000, extra help for pubs and venues, and a two-year real-terms freeze. The saving is only real, though, if your property qualifies, your rateable value puts you in the right band, and the relief actually appears on your bill. Check those three things before April 2027, and this Budget change becomes cash in your business rather than just a headline.
About the Author
