The Autumn Budget 2025 is expected to lay out the finer details of the Non-Domestic Rating (Multipliers and Private Schools) Act 2025, which has already received Royal Assent and new Business Rates banded multipliers will come into force in April 2026. This landmark legislation introduces a major reform to the business rates system, designed to make it fairer, more progressive, and better aligned with modern commercial realities. The most significant change is the shift to a “slice” system-introducing banded multipliers that will particularly affect the largest and most valuable commercial properties. Chancellor Rachel Reeves is set to confirm the exact rates for each multiplier and provide further guidance on transitional relief and eligibility criteria in the upcoming Budget statement.
From slab to slice: A fairer structure
The current “slab” system applies a single multiplier to the entire rateable value (RV) of a property, which can penalise businesses for investing in improvements. The new “slice” system, similar to income tax bands, will apply increasing multipliers to successive portions of RV. This means only the value within higher bands will be taxed at higher rates, encouraging incremental investment and upgrades.
From April 2026, five multipliers will be introduced:
- Two lower small business multipliers – one for Retail, Hospitality and Leisure (RHL) properties and one for non-RHL properties, both for RV under £51,000.
- Two standard multipliers – one for RHL properties and one for non-RHL properties, both with RV of at least £51,000 but under £500,000.
- One higher multiplier – for all properties with RVs of £500,000 and above.
The higher multiplier will be capped at no more than 10p above the standard rate, limiting the impact on large property holders. The rates for the two RHL multipliers cannot be lower than 20p less than the small business multiplier.
What this means for our business clients
Businesses particularly those with high-value commercial premises-should prepare for several key implications:
- Higher rates for larger properties
Properties with RVs above £500,000 will face increased liabilities. This includes corporate headquarters, logistics hubs, and large retail units. Clients should assess their exposure and plan accordingly. - Improved incentives for investment
The slice system removes the “cliff edge” effect of the slab model, making property improvements more financially viable. This is especially relevant for businesses considering green upgrades or expansion. - Transitional relief and revaluation
A transitional relief package will accompany the 2026 revaluation, helping businesses manage sudden increases in rates.
Strategic Considerations for our Clients
Given the complexity and potential financial impact of the reform, we recommend the following actions:
- Review property portfolios to identify assets affected by the higher multiplier.
- Model future liabilities under the slice system to inform budgeting and investment decisions.
- Explore available reliefs, including Improvement Relief and Small Business Rates Relief, which may be expanded under the new framework.
Business Sentiment: Reform vs Reality
The government’s proposed business rates reform aims to modernise the system and stimulate growth, but reactions from the business community suggest a more complex picture.
While policymakers have framed the reform as a pro-growth initiative, many business leaders remain cautious. Industry groups such as the British Chambers of Commerce argue that the changes – though welcome in principle – do not go far enough to address the fundamental flaws in the system. They highlight that the current structure still imposes a disproportionate burden on businesses, particularly those in property-intensive sectors like retail and hospitality.
Ultimately, the reform may be politically popular, but its practical effectiveness will depend on how well it aligns with the real-world needs of UK businesses.
Looking Ahead
The move to a slice-based system represents a significant shift in how business rates are calculated and applied. While it introduces greater fairness and flexibility, it also adds complexity that businesses must prepare for.
