The 2026 business rates "tax cut" is really a rise for a lot of small firms. Here is how to tell which one you got

Here is a rare bit of tax news that sounds like good news: from 1 April 2026 the government cut the business rates multiplier for shops, cafes, salons and gyms in England and called it a permanent tax cut. So why are some owners opening a bigger bill than last year? Because the headline compares your rates to a price you never actually paid. Here is how to work out, in about two minutes, whether your bill went down or up, and what to do either way.

Two things changed on the same day

On 1 April 2026 two separate things hit your business rates at once, and it is easy to blame the wrong one.

• The 40% discount ended. For the last few years, retail, hospitality and leisure businesses in England got 40% knocked off their rates bill, capped at £110,000 per business. That temporary relief stopped on 31 March 2026.
• A permanently lower rate replaced it. In its place, the Autumn Budget on 26 November 2025 set two new lower "multipliers" for these businesses: 38.2p in the pound if your property's rateable value is under £51,000, and 43p from £51,000 up to £499,999. The multiplier is just the number your rateable value is multiplied by to get your yearly bill.

On top of both, 1 April 2026 was a revaluation: the government re-set the rateable value of every property in England, based on what it would have rented for in 2024. So your new bill is built from a new rateable value AND a new rate at the same time.

The "cut" is measured against a price you never paid

Here is the sleight of hand, and it lands straight on your bank balance.

The old small-business multiplier was 49.9p. The new one for shops, cafes, salons and gyms is 38.2p. Lower, therefore a tax cut. That is the government's comparison, and on that basis it is true.

But you never paid 49.9p. You paid it minus the 40% discount. Do that sum and the rate you actually handed over last year was about 29.94p in the pound (49.9p, less 40%). The new rate is 38.2p, with no discount on top.

So for the same property, the rate you pay just went from roughly 30p to 38.2p in the pound. That is not a cut. It is a rise of about 28% on the rates line, dressed up as a cut because it is compared to the full 49.9p rather than to the discounted bill you were really getting.

So did YOUR bill actually go up? Three quick checks

Do not guess, and do not trust the headline either way. Three things decide it:

1. Do you pay any rates at all? If your rateable value is £12,000 or less and you use only one property, you get 100% Small Business Rate Relief and pay nothing, before and after. This change does not touch you. Check this first, because a lot of small units sit here. 2. What is your new rateable value? The revaluation may have pushed it up or down. Look it up on the Valuation Office Agency website. A lower value can cancel out the higher rate; a higher value makes the rise worse. 3. Which side of £51,000 are you on? Under £51,000 you are on the 38.2p rate. From £51,000 to £499,999 you are on 43p. At £500,000 and over you are on a new higher 50.8p rate aimed at big warehouses and superstores, not corner shops.

A worked example on a £20,000 salon

Take a hair salon with a rateable value of £20,000 that did not change at the revaluation: too big for Small Business Rate Relief, but well under £51,000.

• 2025/26: £20,000 x 49.9p = £9,980, less the 40% discount = £5,988 to pay.
• 2026/27: £20,000 x 38.2p = £7,640 to pay, with no discount.

That is £1,652 more for the year, from a change sold as a tax cut. Run the same two lines on your own rateable value and you will know your number in a minute. If your new rateable value went up at the revaluation, add that on top. Our break-even calculator shows how many extra covers or cuts that bill costs you.

One limit worth stating plainly: this is England only

Business rates are devolved, so all of the above is England's system. Scotland, Wales and Northern Ireland run their own rates and their own reliefs, on their own timetables and their own numbers. If you trade there, check your national scheme rather than these figures.

Why a rising fixed cost follows you to the day you sell

Rates are a fixed cost. Unlike staff hours or stock, you cannot roster them down in a quiet week: the bill is the bill whether you serve ten customers or two hundred. That is what makes this rise more dangerous than it looks.

A buyer values your business on the profit a new owner gets to keep, its seller's discretionary earnings, times a multiple. A permanent step-up in a cost you cannot avoid lowers that profit unless you have covered it elsewhere, so it quietly marks down your price. Worse, a buyer reads a business that only worked on the old discounted rate as fragile. One that holds its net margin with rates higher looks resilient, and resilient earnings are what earn a full multiple.