From the 1st of April 2026, the government will introduce a new five‑tier system for business rate. The tier-system introduces differentiated multipliers based on property type and rateable value (“RV”) with the intention of offering greater long-term certainty and support to tenants.
The government says the changes are designed to make the system fairer and more predictable for high street businesses. In reality, some occupiers will see higher bills, others may see reductions, one thing is for sure: both landlords and tenants will need to plan ahead.
Raeesah Dudhwala, Solicitor in the Commercial Property and Corporate Team at Bromleys, explains what’s changing and how you can prepare.
What changes to business rates are coming in April 2026?
Business rates are calculated using a simple formula:
Rateable Value × Multiplier = Business Rates Bill (before reliefs)
The multipliers, expressed in pence per pound of RV will be as follows:
- Small multiplier for Retail, Hospitality and Leisure (“RHL”) properties with RV below £51,000 – 38.2p
- Small multiplier for non-RHL properties with a RV below £51,000 – 43.2p
- Standard multiplier for RHL properties with RV £51,000 – £499,999 – 43p
- Standard multiplier for non-RHL properties with RV £51,000 – £499,999 – £48p
- High-value multiplier for all properties with RV £500,000 and above – 50.8p
Whilst the Government has emphasised that the reforms aim to stabilise the system and support the SME, larger businesses may be impacted the most as they fall into category 5 leading to significant cost increases.
To soften the impact on tenants whose bills may rise significantly under the new system, a transitional relief scheme will be introduced to cap year-on-year increases.
This relief will be funded by a 1p supplement applied in 2026/2027 to businesses who are not receiving transitional relief or Supporting Small Business relief.
What do landlords need to prepare for ahead of the reforms?
Even though tenants usually pay business rates, landlords often feel the knock on effects through rent negotiations, lease renewals and investment decisions. Key considerations include:
1. Rent negotiations and incentives
Higher running costs may lead tenants to:
- renegotiate terms,
- request stepped rent increases,
- or seek incentives at renewal.
2. Impact on high value properties
Properties with an RV of £500,000+ will fall into the highest multiplier band. This could influence:
- tenant demand,
- occupancy rates,
- yields,
- and long term investment planning.
3. Service charges
With overall costs rising, tenants may push for:
- greater transparency,
- tighter service charge budgets,
- or more frequent reconciliations.
4. Lease renewals and drafting clarity
Because business rates heavily influence negotiation, clear drafting in:
- heads of terms,
- rent review clauses,
- and renewal documents
can help avoid future disputes.
What steps should commercial tenants take before the April 2026 changes?
Tenants can start preparing well ahead of the April 2026 changes. These steps will help you stay in control:
1. Check your property details with the VOA
The Valuation Office Agency (VOA) bases your RV on the information it holds.
Make sure it’s accurate.
You’ll need a Business Rates Valuation Account to use the Check, Challenge, Appeal process.
Important: The VOA can issue penalties if incorrect information is submitted knowingly.
2. Review your lease carefully
Most commercial tenants are responsible for business rates.
Pay particular attention to:
- break clauses falling around 2026,
- assumptions within rent reviews,
- lease renewal dates,
- who is responsible for claiming reliefs.
3. Consider whether planned improvements could affect your RV
Some improvements can increase your RV, including:
- refurbishments,
- extensions,
- new plant or machinery.
4. Relief
Tenants should check eligibility early as they could benefit from transitional relief.
5. Budgeting
Due to the new system, the property may fall into a high-value tier and as such, tenants should budget for increased costs.
How can Bromleys help landlords and tenants navigate the 2026 business rates reforms?
The 2026 reforms arrive while many landlords and tenants are already facing market pressures, renewals and investment decisions. Understanding your new RV, the effect of multipliers, and your rights to challenge a valuation can put you in a much stronger position.
If you’d like help reviewing your lease, assessing the impact of Reform, or understanding whether your valuation is accurate, our Commercial Property Team is here to support you.
Speak to our team today. Call us on 0161 330 6821 or email bromleys@bromleys.co.uk for expert, confidential guidance.