Business rates—a topic that makes most business owners roll their eyes and groan. Whether you’re running a bustling café, a high-street shop, or a quirky holiday let, the rollercoaster of reliefs and rate changes can feel more like an endurance test than a fair system. So, what’s the state of play now, and how will the changes on the horizon impact you? Let’s break it down, with just enough humour to keep you awake.
Current Relief Measures: Where We Stand
For now, there’s a bit of breathing room for businesses in certain sectors:
- Retail, Hospitality, and Leisure Relief (2024/25 Fiscal Year):
- Businesses in these sectors benefit from a 75% discount on their business rates, capped at £110,000 per business.
- This relief was extended in the Autumn Budget to help cushion rising operational costs and keep struggling high-street businesses and hospitality venues afloat.
- Small Business Rates Multiplier Freeze:
- The small business multiplier (49.9p) has been frozen, meaning smaller properties won’t face inflation-driven increases in rates for the 2024/25 fiscal year.
For many, these measures are the difference between staying afloat and sinking under rising costs. But, as always, the good times don’t last forever.
What’s Changing: April 2025 and Beyond
The bad news is that some of these reliefs are set to shrink, while others will adjust in ways that might sting. Here’s what’s coming:
- Retail, Hospitality, and Leisure Relief Reductions:
- From April 2025, the 75% relief will drop to a 40% discount, still capped at £110,000 per business.
- If you’ve been banking on this support, it’s time to plan for higher rates bills—and perhaps review your pricing strategy.
- High-Value Properties Get Hit Harder:
- While the small business multiplier stays frozen, properties with higher rateable values will face a higher standard multiplier. Translation: bigger bills for larger businesses or those in prime locations.
Furnished Holiday Lets: The Big Shake-Up
For those running furnished holiday lets (FHLs), the news gets even worse. The FHL regime is being scrapped entirely, meaning:
- No More Business Rates: Properties currently qualifying for business rates will revert to council tax.
- No Small Business Rates Relief (SBRR): The removal of business rates means the loss of SBRR, which many FHLs relied on to reduce or eliminate their rates bill.
For owners, this could mean a significant hike in costs. If your property isn’t profitable now, this change might tip it into loss-making territory, forcing you to reassess your strategy.
How the Current and Future Systems Compare
| Aspect | Now | From April 2025 |
|---|---|---|
| Retail, Hospitality, Leisure | 75% relief, capped at £110,000 per business | 40% relief, capped at £110,000 per business |
| Small Business Rates Multiplier | Frozen at 49.9p | Remains frozen |
| High-Value Properties | Standard multiplier applies | Higher multiplier for larger properties |
| Furnished Holiday Lets | Business rates with SBRR available | Council tax applies; no SBRR available |
What Should You Do Now?
If the thought of these changes has you nervously clutching your calculator, here are a few steps to prepare:
- Review Your Rateable Value:
- Ensure your property is accurately valued. If you think it’s too high, consider appealing through the Valuation Office Agency (VOA)—but be prepared for a lengthy process.
- Prepare for FHL Changes:
- If you own holiday lets, assess how switching to council tax will affect profitability. You may need to rethink pricing, marketing, or even whether the property remains viable as a let.
- Plan for Relief Reductions:
- If your business relies on the retail, hospitality, and leisure relief, budget for the reduced 40% discount from 2025 onwards.
- Explore New Opportunities:
- For some businesses, changes to rates might prompt a wider review of your property portfolio. Are you making the best use of your space? Could certain properties be repurposed or sold?
Final Thoughts
While business rates relief has provided a lifeline for many, the reductions and changes on the horizon will undoubtedly create challenges. For those in the leisure sector, particularly holiday let owners, the loss of the FHL regime could mean a fundamental shift in how you operate—or even whether you continue.
Now’s the time to assess your numbers, explore options, and make strategic decisions about the future. If it all feels overwhelming, don’t panic—we’re here to help you navigate the ups and downs of business rates, armed with spreadsheets, advice, and maybe even a stiff drink. Because let’s face it, you’ll need it!
