Business rates increase: What retail and hospitality businesses should do now

What’s changing and why is it significant?

From 1 April, businesses across the UK started being taxed according to new rateable values (RVs), based on how much it would cost to rent the property in 2024. Additionally, there are now five new multipliers used to calculate business rates. Retail, hospitality and leisure (RHL) businesses with an RV of 51,000 or less will face a lower multiplier of 38.2p, while those with an RV between £51,000 and £499,999 will face a higher multiplier of 43.0p, finally all businesses, regardless of sector, valued at 500,000 or more will face the multiplier of 50.8p, above the national standard.

New multipliers from April 2026

These new multipliers aim to provide more permanent stability and establish a fairer system, particularly for small businesses.

However, for those that are seeing their rates increase, the results are far from favourable. In many cases it’s still too early to judge the full impact, some businesses won’t feel the real change until May, once direct debits and instalments take effect, but as statements arrive, now is the moment to verify the numbers and review plans accordingly.

What should retail and hospitality businesses do next?

Now: Get the bill right

• Sense-check your new rateable value:  Compare the rateable value on your bill with the rating list and with similar properties nearby. Check basics like floor area, use class and whether all parts of the property should be included. Administrative errors can occur, so if anything looks off, bring in an expert or adviser to review it early so you don’t bake an error into forecasts and board reporting.

Next 1-3 months: Protect cash and margins

•  Rework the P&L with the new costs: Consider the new bill as a fixed-cost adjustment and reassess site-level and group-level profit and loss statements. Assess rates as a percentage of turnover for each location, identifying sites where this ratio exceeds acceptable thresholds. Appropriate responses may involve moderating recruitment efforts, adjusting rota schedules, reducing trading hours on less profitable days, and for locations that consistently underperform despite these interventions, initiating plans for managed closures or exits.
• Pause or re-prioritise capital projects: Re-rank capex using updated returns that reflect the new cost base. Some refurbishments, new formats or technology roll-outs may need to move from “approved” to “on hold” unless trading stays on plan. Be explicit about which projects only proceed if certain revenue or cash thresholds are met, and which are so critical to brand or compliance that they must go ahead.
• Where you have capacity, invest in efficiency: For businesses with genuine headroom, this is could be an incentive to accelerate efficiency initiatives such as better workforce management, automation of back-office tasks, or self-service/digital ordering where it fits the brand. Those investments should have a clear payback period and a measurable impact on labour or overhead.

Next 1-3 years: Reshape the model

• Protect the long-term brand while stress-testing scenarios: While cutting costs is often the first solution in tough markets, it’s important to clearly identify non-negotiables for long-term success. Core locations, service standards, and product quality should be adjusted only as a last resort. For instance, some retailers have deliberately held onto flagship sites through previous downturns because those locations are central to how customers see the brand, and they have been rewarded for that consistency over time. The best approach is to separate brand-defining assets from nice-to-have spend and take a more surgical approach. Simultaneously, it is essential that strategy remains flexible rather than rigid. Develop best-, base-, and worst-case scenarios incorporating the updated rates, and establish clear thresholds ahead of time at which critical assets or formats will be subject to review if they become consistently loss-making, or pose risks to covenant compliance.
• Consider diversification (if you can fund it): Pressure on physical sites can be the push needed to rebalance channels. This could look like slightly fewer locations, but better-performing ones supported by a strong omnichannel model including digital, click-and-collect and delivery options. Certain operators might also consider alternative revenue streams, including hospitality-focused services within retail settings, or hotels and accommodation providers introducing event package deals. Nevertheless, all of this still needs capital, so it’s only realistic where the balance sheet allows.