Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026
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Baroness Taylor of Stevenage
That the draft Regulations laid before the House on 15 December 2025 be approved.
Relevant document: 47th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I appreciate that noble Lords’ enthusiasm for transitional relief on business rates at 12.07 am might not be as keen as mine, so I will be as brief as possible, but it is necessary to set out the detail of the regulations.
Before I discuss the regulations before us in detail, I wish to briefly touch on the measures announced yesterday by the Government—which is actually now the day before yesterday, but let us not split hairs—as this is relevant to the Motion tabled by the noble Lord, Lord Jamieson, which I will address in full in my opening statement. Yesterday, the Government announced a further 15% relief for pubs and live music venues in 2026-27, on top of the support package announced at the Budget. This will be followed in 2027-28 and 2028-29 by a real-terms freeze in the bills of these properties.
As a result of the intervention next year, around three-quarters of pubs will see their bills fall or stay the same. I add that the Government published a definition of “pub” and “live music venue” which local authorities will use in determining which properties in their area are eligible, and formal guidance for local authorities will be issued shortly.
These regulations provide for the business rates transitional relief that was announced by the Chancellor at the Budget. This scheme, provided over three years, gradually phases in large bill increases created by the 2026 revaluation. It also puts in place a 1p transitional relief supplement for one year only, in 2026-27, to help fund the relief provided.
These regulations are necessary because of the 2026 business rates revaluation. As of 1 April 2026, the revaluation will update the rateable value of the 2 million non-domestic properties in England. Revaluations are an important and necessary part of the business rates system, where rateable values are updated to reflect market conditions. At the same time, the multipliers or tax rates are adjusted in response to the overall movement in the tax base.
If the overall rateable value increases at the revaluation, it has a downward pressure on the tax rates, and vice versa. That is why the multipliers for next year will be at a lower rate than they are currently. This does not necessarily mean that bills go down; at revaluation, some ratepayers’ bills go down, some stay the same and some go up. The Government fully understand that, for some ratepayers seeing increases, support is required to help them move gradually to their new liability over time. That is why the Government have introduced a support package to help ratepayers with their new liability, and these regulations are part of that support package.
To return to the points raised by the noble Lord, Lord Jamieson, in his amendment, it is important to clarify a factual point. These regulations do not alter or reduce the current 2025-26 retail, hospitality and leisure relief, or other small business reliefs within the business rates system, such as small business rate relief. Voting against these regulations would, in fact, prevent us giving transitional relief support to ratepayers. To address the broader point made by the noble Lord, the retail, hospitality and leisure relief was introduced to support eligible ratepayers during Covid. It was an atypical measure for an atypical period of time.
This Government have been clear, first at Budget 2024 and then through our passage of primary legislation, the Non-Domestic Rating Act 2025 to create the new multipliers, that, as part of our broader work to transform the business rate system, we would end the temporary, financially unsustainable Covid-era relief and replace it with a permanent lower tax rate for eligible retail, hospitality and leisure properties. The Government have done that through the introduction of the new permanent retail, hospitality and leisure multipliers for qualifying properties with rateable values below £500,000. However, the Government are well aware that a lower tax rate does not necessarily equate to a lower rate liability. Some ratepayers, particularly those in sectors which were closed due to Covid on 1 April 2021—the antecedent valuation date for the 2023 revaluation—have seen substantial rateable value growth. This was expected as normal economic activity has been restored since Covid.
It is right and important that the previous Covid-era relief is unwound, but the pace at which we do that is just as important. That is why, at the Budget, the Government also announced the expanded supporting small business relief scheme. The scheme provides relief to ratepayers losing some or all of certain reliefs as a result of the revaluation, including the 2025-26 retail, hospitality and leisure relief. That scheme caps bill increases for eligible properties at whichever is the higher of £800 or the relevant transitional relief percentage cap. Importantly, the capped increase is calculated from a base liability, including the effect of the eligible reliefs, providing enhanced support to enable these ratepayers to transition to their new liability over time.
As I have set out, the Government, following engagement with stakeholders, went further yesterday for pubs and live music venues, announcing additional support on top of this Budget package. The regulations before us today do not deliver the supporting small business relief scheme, or measures announced yesterday. These are provided by guidance that is published by my department, which enables local authorities to apply these additional reliefs. None the less, they are important contexts to remember, and are pertinent to the points raised by the noble Lord as we consider the draft instrument before us.
This instrument delivers the transitional relief scheme element of the government support package, and will protect properties from large overnight increases in their business rate bills as a result of the revaluation. It will cap bill increases by a set percentage each year. For example, in 2026-27, the caps within the transitional relief scheme are 5% for small properties, 15% for medium properties and 30% for large properties. These are the same year one caps as set at the 2023 revaluation. These caps are applied before changes in other reliefs and local supplements. Therefore, changes in actual bills may differ from those caps.
At this revaluation, the transitional relief scheme will provide more generous caps for large properties in years 2 and 3 compared to previous revaluations. The caps in years 2 and 3 will also rise with inflation, as has been the case previously.
The noble Lord has raised the fact that no public consultation was undertaken prior to the laying of these regulations. As was set out in the Explanatory Memorandum accompanying the draft instrument, transitional relief was last consulted on in 2022. In their consultation response in 2022, the then Government stated:
“Given that upwards caps have been consistently retained for consecutive schemes and, in general, it is only the level of support provided that will vary, the government will no longer consult on the scope of future TR schemes as a matter of course”.
That response also stated:
“Future TR schemes will be developed taking into account revaluation outcomes to ensure that the support provided continues to be effectively targeted at ratepayers facing the largest bill increases”.
The steps that this Government have taken to redesign the scheme include providing more generous support in years 2 and 3 for the largest ratepayers and calculating support from the relevant multiplier that each ratepayer pays.
Lord Stoneham of Droxford (LD)
My Lords, this is the last speech that I shall be making after midnight as Chief Whip for the Liberal Democrats, because I am stepping down at the weekend. I hope that the first thing that the next Session of Parliament does is bring in some legislation, or whatever we require, to modernise the hours of this House. It is ludicrous that we are sitting here at this time.
I will not speak for very long, because this SI is aimed at providing transitional relief to support business rate payers as they transfer to the new bills following the 2026 business rates revaluation. It is based on schemes that we have had for some time and has been improved by the Government. We will deal with extra support for public music venues when we look at the SIs on 10 February, so I am not going to go on about the impact of NI with the minimum wage and the rate valuation now. We will look more closely at those issues at that time.
We support the new structure of rates designed to shift the burden from the high street to large warehouses. The only problem that I want to raise is that the Government would do well to publish data on the impact of the revaluation on specific sectors to help analyse the need for targeted support.
Baroness Taylor of Stevenage (Lab)
My Lords, before I respond to the regret amendment, I thank the noble Lord, Lord Stoneham, for all his work as Chief Whip of the Liberal Democrat group. I am very grateful to him for everything he has done. I know that he will continue to contribute in the House, but we are very grateful for what he has done in that role.
Quite honestly, it was the party opposite that sat on their hands as our high streets crumbled around them for 14 years. Therefore, I find this simply astonishing, and the selective memory on Covid measures, again, is quite baffling. The measures were put in as a response to the situation during Covid. I will respond to some of the points that the noble Lord, Lord Jamieson, made, but I do so in the hope that, at some point, those who were part of the previous Government will have a bit of humility about the fact that we have had to come in and sort all this out, because it was left in such a mess when we took over in 2024.
In relation to the noble Lord’s comments on stealth tax, the retail, hospitality and leisure relief introduced by the previous Government in 2020 is unsustainable and was always temporary in nature. We have ended the uncertainty of that relief and replaced it with permanently lower tax rates for eligible retail, hospitality and leisure properties. We have done this in a way that is financially responsible and sustainable by funding this support from within the business rate system via the high-value multiplier for ratepayers with a rateable value of £500,000 and above.
In relation to further support for high streets, as I set out in my opening speech, the Government have introduced permanently lower multipliers, and we have also provided an expanded supporting small business rate relief scheme to help those ratepayers gradually move from the 2025-26 relief to the new tax rates by moderating their bill increases over the next three years. We went further in the announcements yesterday with the additional 15% relief for pubs and live music venues on top of the Budget package.