The Chancellor, John Healey, used his first Budget on 28 October to raise the rateable value threshold for full business rates relief on small shops, pubs, restaurants and leisure sites in England from £12,000 to £18,000. The change takes effect in April 2027 and sits alongside a two-year cap on bills for the wider retail and hospitality sector.
The new thresholds apply to qualifying retail, hospitality and leisure properties, and the tapered relief band moves from £15,000 to £21,000, according to a letter from the Ministry of Housing, Communities and Local Government to English billing authorities. Business rates are devolved, so the package covers England only, while Scotland, Wales and Northern Ireland run their own schemes. It builds on support for pubs announced earlier in 2026, which the Morning Advertiser said the prime minister, Andy Burnham, had described as a first step.
What changes from April 2027
Eligible properties receive 100% relief up to £18,000 of rateable value, tapering evenly to nothing at £21,000, and the higher thresholds run until 31 March 2029. Bills for qualifying retail, hospitality and leisure properties, and for pubs and live music venues, are capped at CPI inflation in 2027/28 and 2028/29. Relief for pubs rises from 15% to 35% over the same two years, a cost line set out in our guide to opening a pub in the UK.
The Morning Advertiser reported that an additional 3,500 pubs, 3,900 restaurants and 2,200 cafés will pay no business rates from April 2027, based on the Budget documents, a saving that falls to the operator rather than the brand across the restaurant franchises in the UK.
Who loses relief and how it is funded
Vape shops lose access to Small Business Rates Relief and to the retail, hospitality and leisure multipliers, while adult gaming centres lose the multipliers but keep Small Business Rates Relief on the existing £12,000 and £15,000 thresholds.
The Morning Advertiser reported that Machine Games Duty will rise from 20% to 25% on machines with stakes over £1 or prizes over £100 from April 2027, with the lower-stake rate unchanged. The department also extends a 1p transitional relief supplement for two years and plans a general anti-avoidance rule after a winter consultation.
Where these rules apply
The thresholds, caps and multipliers in this package are set for England. Scotland, Wales and Northern Ireland set their own business rates relief schemes, so the figures above are not UK-wide, one of several divergences covered in UK franchise law: how England, Scotland and Northern Ireland differ.
How the sector has responded
Hospitality bodies continued to warn that rates relief alone would not offset rising employment, energy and other costs, the Morning Advertiser reported. Sir Tim Martin, founder and chairman of JD Wetherspoon, had warned operators against being “fooled by smoke and mirrors”.
On Propel, the Night Time Industries Association said consumers had reached an “affordability ceiling” when going out, citing CGA by NIQ data showing average spend on food and drink in pubs, bars and restaurants at £28.06 in 2026.
What comes next
The department says regulations and guidance will follow in the coming weeks, and the new thresholds will be reviewed at the 2029 revaluation. Beyond rates, the chancellor set out plans for local government to keep 100% of business rates revenue by the end of the decade, with mayors receiving a 20% share from April 2027, and mayors will gain powers to introduce an overnight visitors’ levy from 2028, which the Morning Advertiser noted could affect pubs with accommodation.
