Small business rates relief: could you pay nothing from April 2027?

If you run a small shop, café or restaurant, your business rates bill could disappear next April. The government is increasing the thresholds for small business rates relief, meaning around 70,000 more businesses in England could pay nothing at all.

The changes, announced in the Autumn Budget, are due to take effect on 1st April 2027. However, not every small business will benefit. Here’s what you need to know.

What is small business rates relief?

Business rates are a tax charged on most commercial properties, including shops, offices, restaurants and warehouses.

Your bill is based on your property’s rateable value. This is an estimate of its annual rental value, rather than the rent you actually pay. Your local council uses this figure, together with a multiplier, to calculate your business rates.

Small Business Rate Relief (SBRR) reduces the amount you pay if your premises qualify. In some cases, you won’t have to pay any business rates.

Under the current rules in England:

• Properties with a rateable value of £12,000 or less can receive 100% relief.
• Properties valued between £12,001 and £15,000 receive a gradually reducing discount.
• Properties valued at £15,000 or more don’t normally qualify for SBRR.

You must generally occupy only one business property to qualify, although there are exceptions if you use additional premises.

What’s changing to small business rates relief in April 2027?

The government is increasing the thresholds for qualifying retail, hospitality and leisure businesses.

From 1st April 2027:

• Full relief will apply to properties with a rateable value of up to £18,000, rather than £12,000.
• Partial relief will extend to properties with a rateable value between £18,001 and £21,000, rather than £12,001 to £15,000.

The higher thresholds will apply until 31st March 2029, when they’re due to be reviewed.

According to the government, the changes will mean around 70,000 additional businesses paying no rates. These include thousands of cafés, restaurants, pubs, hairdressers and beauty salons.

How much could your business save?

Let’s suppose you run a small café with a rateable value of £16,000. It’s your only business property.

Under the current rules, you don’t qualify for Small Business Rate Relief because your property’s value exceeds £15,000.

From April 2027, however, the new £18,000 threshold means your café could qualify for 100% relief. Assuming you meet the other conditions, your business rates bill would fall to zero.

That’s potentially a saving of several thousand pounds a year, depending on what you’re currently paying.

If your premises have a rateable value of £19,500, you’d receive 50% relief under the new rules, assuming you’re eligible.

Remember that your property’s rateable value isn’t the same as your business rates bill. Nor is it necessarily what you pay in rent.

You can find your property’s rateable value using the Valuation Office’s online service.

What if you don’t run a shop, café or restaurant?

Here’s where it’s worth being careful.

The higher thresholds are specifically for qualifying retail, hospitality and leisure properties in England. They won’t automatically apply to every small business.

For example, if you run a small marketing agency, office-based consultancy or workshop, the existing Small Business Rate Relief thresholds will continue to apply.

That means you can still receive full relief if your property’s rateable value is £12,000 or less, with partial relief available up to £15,000.

You may also qualify for other business rates support. Even if you don’t receive SBRR, a lower business rates multiplier could reduce your bill.

The government has announced separate support for certain pubs, social clubs and live music venues. We’ve covered that in our earlier article about the business rates cut from April 2027.

What if you have more than one business property?

Small Business Rate Relief is mainly intended for businesses occupying a single property.

However, having more than one premises doesn’t necessarily mean you’ll lose your relief. You may still qualify if the additional properties have low rateable values.

There are also rules allowing businesses to retain relief temporarily after taking on another property.

If you’ve recently expanded, or you’re considering opening a second premises, it’s worth checking how the rules affect you before making assumptions about your future rates bill.

How do you claim small business rates relief?

Your local council is responsible for administering business rates and applying the relief.

Some councils apply relief automatically, while others may require you to make a claim. If you think you’re eligible but aren’t receiving the discount, contact your council.

You should also check that the rateable value being used is correct. If you believe it’s wrong, you can challenge it through the Valuation Office.

For more information, see the government’s Small Business Rate Relief guidance.

Could your business pay less from April 2027?

If you run a qualifying retail, hospitality or leisure business, now is a good time to check your property’s rateable value and see whether the new thresholds could reduce your bill.

You should also review your business forecasts for 2027/28. Lower rates could free up money for investment, staffing or other running costs.

The changes are still subject to legislation, so don’t assume your bill will fall until your council confirms your entitlement.

If you’d like help understanding how the Budget changes could affect your business finances, THP can help. Check out our business accounting services to find out more.