Business Rates Revaluation 2026: Should You Challenge?
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The latest business rates revaluation is now in force, and while many bills are rising, businesses that challenge inaccurate rateable values could significantly reduce their business rates liability.
This month saw a big change in commercial property taxation which affects almost every business: the three-yearly revaluation of rateable value for business rates, and an accompanying adjustment in the various business rates multipliers.
As ever with these measures, there are winners and losers (although almost inevitably more of the latter than the former). The new rateable values are based on the rental values as at 1st April 2024, which compared with the previous valuation on 1st April 2021 – in the midst of the pandemic – are higher more or less across the board, and in particular in the industrial building sector which has seen strong rental growth over that period.
On average rateable values have increased by 21% across the UK, but this single figure masks some more modest increases, and a few eye-watering ones which have hit the headlines.
On the other hand, the business rates multiplier, which is the figure used to determine the actual tax payable, has reduced across the board, by 13% for industrial buildings and offices, and by 23% for retail, leisure and hospitality – although that sector has also lost the temporary rates relief which dated from the Covid period.
No business should be facing immediate huge increases, because the transitional relief limits how much a business rates bill can go up in any one year. This measure is skewed in favour of smaller businesses, who receive a higher level of relief. Very large businesses face a double whammy: a lower level of transitional relief, and a supplement to the multiplier for buildings with a rateable value of more than £500,000.
Despite rising rental values driving up rateable values, there is scope to challenge unreasonable increases. I was able to help one of my clients persuade the Valuation office Agency (VOA) that the changes they had made to an industrial building – essentially stripping out the offices – had reduced its rental value, and as a result we successfully got the new rateable value reduced from £195,000 to £110,000, resulting in a huge reduction in business rates (and this was backdated to 2023, too!).
These new rateable values and multipliers are now set in stone for three years until April 2029. By then it is entirely possible that the root-and-branch review of business rates alluded to in the 2024 Budget may have moved forward. Whilst few would argue that we can afford not to tax business premises, business rates as they currently stand are a blunt instrument which is ripe for reform.
Kevin Atkins is an associate in the Commercial property team at Arnolds Keys.
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