Business rates for pubs, hotels and shops from 2026

From 1 April 2026, occupied shops, pubs, restaurants, hotels and leisure venues in England with a rateable value below £500,000 are billed using permanently lower retail, hospitality and leisure multipliers instead of receiving the old retail, hospitality and leisure relief. For 2026 to 2027 the multipliers are 38.2 pence for rateable values below £51,000 and 43 pence from £51,000 to £499,999, each 5 pence below the ordinary rate. Eligibility is set by regulations, not council discretion: the property must be wholly or mainly used to provide retail, hospitality or leisure to visiting members of the public.

What replaced retail, hospitality and leisure relief?

For 2025 to 2026, eligible properties received a 40% relief that local councils awarded with considerable discretion and subject to a cash cap. GOV.UK now states that no new claims for that relief can be made and that from 1 April 2026 bills are calculated with rate multipliers instead. The Non Domestic Rating (Multipliers and Private Schools) Act 2025 amended the Local Government Finance Act 1988 so that the Treasury can prescribe a lower multiplier for a “qualifying retail, hospitality or leisure hereditament”, a term defined by regulations. The lower multipliers cannot be more than 20 pence below the small business multiplier.

The definition is in the Non Domestic Rating (Definition of Qualifying Retail, Hospitality or Leisure Hereditament) Regulations 2025, SI 2025/1093, with HM Treasury guidance for councils. Treasury describes the change as a permanent tax cut and, unlike the old relief, there is no cash cap, so every qualifying property in a chain gets the lower multiplier. For the general mechanics of rateable value, revaluation and appeals, see business rates: how they are calculated.

Which multipliers apply in 2026 to 2027?

Rateable value	Most properties	Qualifying retail, hospitality and leisure
Below £51,000	43.2p	38.2p
£51,000 to £499,999	48p	43p
£500,000 or more	50.8p	50.8p

These are England figures; Wales and the City of London use different multipliers, and the Treasury guidance applies to England only. Large hotels and department stores with a rateable value of £500,000 or more get no reduction and pay the higher multiplier.

Who qualifies for the lower multipliers?

Regulation 3 sets out three qualifying purposes: a retail purpose (retail sale or hire of goods, or provision of a service), a hospitality purpose (sale of food or drink, or holiday or similar temporary accommodation) and a leisure purpose (cultural, community or recreational facilities). The property must be wholly or mainly used for one or more of these, and the activity must be provided to visiting members of the public. Councils decide the main use on the facts, and Treasury suggests floor space, turnover or staff as possible measures.

The guidance’s examples for hospitality include restaurants, takeaways that are generally open to callers even if most sales are deliveries, sandwich shops, coffee shops, cafes, pubs and bars. Hotels, guest houses, B&Bs, serviced apartments within business rates, holiday homes, caravan parks and campsites qualify, provided no significant element of nursing care is provided. Leisure examples include cinemas, theatres, nightclubs, live music venues, gyms, spas, bowling, escape rooms, soft play and zoos. Needing a membership, a ticket or an appointment does not stop customers being visiting members of the public.

Which businesses are excluded?

Schedule 1 to the regulations excludes properties wholly or mainly used for:

• financial services such as banks, building societies, insurance agents and financial advisers;
• medical and health services, including dentistry and physiotherapy;
• professional services, including accountancy, law, tax advice, estate agency and letting agency;
• warehouses storing and distributing goods for online sales, even with a small trade counter;
• conference centres, betting shops, car parks, show homes, taxi firms and transport hubs such as stations and airports.

The guidance also says breweries do not qualify unless they are wholly or mainly open to the public, for example mainly used as a bar or for tours. A hotel that is mainly a conference centre therefore needs looking at carefully.

What happens if a hospitality property is empty?

The lower multipliers apply only to occupied properties billed under Schedule 4ZA to the 1988 Act. If a qualifying pub or restaurant closes, the council will apply empty property relief first, and when that ends the bill reverts to the national multiplier, even if the next occupier will run the same kind of business. MHCLG’s information letter 4/2025 confirmed this mirrors the old relief.

How are bills protected during the change?

Many hospitality businesses lost a 40% relief and gained a 5 pence multiplier cut at the same time as a revaluation, so some bills rose. Supporting small business relief limits the increase for a property that has lost some or all of its retail, hospitality and leisure relief, small business rate relief or rural rate relief. For 2026 to 2027 the bill rises by no more than £800 or a percentage cap, whichever is greater: 5% for rateable values up to £20,000 (£28,000 in London), 15% from £20,001 (£28,001 in London) to £100,000, and 30% above £100,000, compared with the final 2025 to 2026 bill. The council adjusts the bill.

Is there extra help for pubs and live music venues?

Yes. For 2026 to 2027 pubs and live music venues receive a 15% relief on top of the lower multipliers and any transitional or supporting small business relief, and bills are then frozen in real terms for 2027 to 2028 and 2028 to 2029. To count as a pub the premises must be open to the general public, allow free entry except for occasional entertainment, allow drinking without requiring food, and permit drinks to be bought at a bar. Restaurants, cafes, nightclubs, hotels, guest houses and sporting venues are outside this relief, though they can still qualify for the lower multipliers.

HM Treasury’s worked example is an independent pub whose rateable value rose from £30,000 to £39,000. Its 2025 to 2026 bill after 40% relief was £8,982. Under supporting small business relief the 15% cap applied, giving £10,329, and the 15% pub relief then reduced this to £8,780 for 2026 to 2027.

How would a cafe’s bill compare?

Illustration only. A cafe has a rateable value of £40,000 and no other reliefs apply.

• At the retail, hospitality and leisure multiplier: £40,000 × 0.382 = £15,280.
• If it did not qualify, for example because it was mainly used as offices: £40,000 × 0.432 = £17,280.

The lower multiplier saves £2,000 a year before any transitional protection. Business rates remain an allowable deduction against profits; see allowable business expenses.

What mistakes come up most often?

• Assuming relief last year means qualification now. Treasury says some properties that received the discretionary relief will fall outside the statutory definition.
• Mixed use premises. A small shop counter in a mainly office building does not qualify; the test is main use.
• Forgetting empty periods. A refit that leaves premises unoccupied can move the bill to the national multiplier once empty property relief ends. See also capital allowances on pub and restaurant refits.
• Self catering confusion. Holiday lets qualify only if they are rated at all; see business rates or council tax for holiday lets.
• Not checking the bill. Demand notices should show all five multipliers; if the wrong one is used, contact the council.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

• Small business rate relief and other rates reliefs
• Business rates relief for charities
• Can a holiday let qualify for business relief
• Visitor levies in Scotland and Wales
• Serviced accommodation and Airbnb: how it is taxed

Sources

• GOV.UK: Calculate your business rates
• GOV.UK: Retail discount
• legislation.gov.uk: Act 2025 c. 12, section 3
• legislation.gov.uk: Act 2025 c. 12, section 1
• GOV.UK: Business rates multipliers qualifying retail hospitality or leisure
• GOV.UK: 42025 retail hospitality and leisure rhl multipliers
• GOV.UK: Supporting small business relief
• GOV.UK: Pubs and live music venues relief

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.