Business Rates: what changes in April 2026?

Business rates are one of the biggest fixed costs for organisations that occupy commercial property. From 1 April 2026 the way that business rates are calculated, and reliefs are applied, is changing. 

How Business Rates are calculated — the basics

Your business rates bill is calculated using three key elements:

1. Rateable Value (RV).  Every property has a valuation by the Valuation Office Agency (VOA) based on a hypothetical rental amount.  Factors affecting this include rentals for similar properties in your area and what the property is used for.

2. Multiplier.  This is a figure set by central government and applied nationally. You multiply your RV by the multiplier (expressed in “pence in the pound”) to get your “gross” business rates bill.

3. Reliefs & Reductions.  Once you have the gross amount, you subtract any reliefs for which you qualify

What’s changing from April 2026

The government has overhauled business rates ahead of the 2026 revaluation. The main changes are:

1. Revaluation of Rateable Values. The national Valuation Office Agency (VOA) has updated all commercial property valuations based on rental market conditions at April 2024.  Any challenge on an individual valuation is done through the VOA and not your local council.

 2. New Multipliers. Currently (2025/26) there is a standard multiplier and a small business multiplier. From April 2026, the system expands to five multipliers based on both property use and rateable value.  There will now be separate multipliers for

·       RHL (Retail, Hospitality and Leisure) businesses

·       Small businesses (Rateable Value < £51,000)

·       Standard business (Rateable value £51,000 to £499,999):

3. Reliefs

Supporting Small Business Relief (SSBR)

Some existing reliefs will no longer be available from April 2026.  Bill increases for businesses losing some or all of their small business rates relief or rural rate relief will be capped at the higher of £800 or the relevant transitional relief caps from 1 April 2026.  The new RHL multipliers replace the temporary 40% RHL relief that ends on 31 March 2026. 

Charities who are already entitled to mandatory 80% relief, are not eligible for the 2026 SSBR.

Pubs and Live Music venues are eligible for an additional 15% relief from April.

Transitional Relief — A Safety Net

When rateable values change significantly on revaluation, some businesses could face large jumps in bills. Transitional Relief is a government scheme that limits how much a bill can rise in a single year following revaluation. It ensures changes are phased in over three years rather than hitting a business all at once.

Increases are capped at a percentage of the previous year’s bill.  The cap depends on your RV.

As these Year 1 cap percentages increase over Years 2 and 3, rates bills could rise in future years under this scheme.  Transitional Relief is applied automatically by your council. 

Worked Example 1

A café has a current Rateable Value of £20,000 with an increase to £25,000 from April 2026.

In this example, the cap limits the rates increase to 15%.  The cap will increase in 2027/28 and 2028/9 meaning the café will pay more rates in these years

Worked example 2

A factory has a rateable value of £70,000 with an increase to £80,000 from April 2026.

 Next steps to estimate your bill

·       Check what your Rateable Value will be from April 2026.  See VOA link at end of article.

·       Check the multiplier from the multiplier table above

·       Check eligibility for reliefs.  Most are applied automatically by your council, see their website for details.

If your business rates bill looks like it will rise significantly then you may be helped by the cap set with Transitional Relief.

Summary

There will be a new Rateable Value for every commercial property from 1 April 2026

These Rateable Values will be used with new multipliers, with new, separate ones for Retail, Hospitality and Leisure business

Existing reliefs such as Small Business, Retail, and Rural will no longer be available

Increases will be capped through a Transitional Relief mechanism

Our Business Sheffield advisors are here to support in planning for these changes.  For free no-obligation advice on this, or any other business issue, please contact us.

·       Email: businesssheffield@sheffield.gov.uk

·       Phone: 0114 224 5000

·       Website: https://www.welcometosheffield.co.uk/business 

Useful links

Find out your rateable value:  https://www.tax.service.gov.uk/business-rates-find/search 

How business rates are calculated: https://www.gov.uk/introduction-to-business-rates/how-your-rates-are-calculated 

Transitional Relief: https://www.gov.uk/business-rates-relief/transitional-relief

Rates information for Sheffield businesses: https://www.sheffield.gov.uk/business/business-rates 

Information correct at Jan 2026 and is subject to change