70,000 More Shops, Cafés And Salons Will Pay Zero Business Rates From April 2027

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From 1 April 2027, a qualifying shop, café, salon, pub or other retail, hospitality or leisure property in England with a rateable value up to £18,000 will pay no business rates, up from £12,000. Partial relief will run up to £21,000. The saving is real, but it increases your taxable profit by the same amount.

The change was announced in Budget 2026 on 28 October 2026 and does not affect bills for the rest of the 2026/27 financial year, which runs to 31 March 2027. It applies in England only. Scotland and Wales run their own business rates reliefs, and nothing in this measure changes them.

What exactly changes on 1 April 2027?

Small Business Rates Relief (SBRR) is a reduction in your business rates bill, up to 100%, for a business occupying one main property below a set rateable value. The rateable value is the Valuation Office Agency's estimate of the yearly rent your premises could fetch, and it is printed on your bill.

The Budget 2026 document published by HM Treasury raises the SBRR thresholds for qualifying retail, hospitality and leisure (RHL) properties at paragraph 6.190:

Other businesses, such as offices, workshops and storage units, stay on the existing £12,000 and £15,000 thresholds. That matters if you are a builder or subcontractor with a yard or unit: this change is not for you.

The Treasury expects around 70,000 more high street businesses to pay nothing, including an extra 3,500 pubs, 3,900 restaurants, 2,200 cafés and 1,700 hairdressers and beauty salons. Paragraph 3.23 of the Budget says that half of all RHL properties in England will then pay no business rates at all.

Does your business count as retail, hospitality or leisure?

The relief follows how the property is used, not what your business is called. Shops, cafés, restaurants, pubs, hairdressers and beauty salons are named in the Budget. If your premises are used partly for something else, for example a salon with a large training room hired out to others, ask your council how it classifies the property before you count on the relief.

A simple test is your 2026/27 bill. Since 1 April 2026 qualifying RHL properties have been charged on separate, lower RHL multipliers (the pence-in-the-pound rate applied to your rateable value). The MHCLG notification of the 2026/27 multipliers sets the small business RHL multiplier at 38.2p for properties with a rateable value up to £50,999. If your bill uses 38.2p rather than 43.2p, the council already treats you as RHL.

To check your rateable value, use the GOV.UK service to find a business rates valuation. The 2026 revaluation took effect on 1 April 2026, so the value on your 2026/27 bill may differ from the figure you remember.

How does the taper work between £18,000 and £21,000?

Relief falls in a straight line from 100% at £18,000 to nothing at £21,000, so every £300 of rateable value above £18,000 costs you about 10% of the relief.

Example: a café has a rateable value of £19,500. Its bill before relief at the 2026/27 small business RHL multiplier is £7,449 (£19,500 × 38.2p). It sits halfway along the taper, so it gets 50% relief and pays £3,724.50. The 2027/28 multipliers have not yet been published, but the Budget caps RHL bill increases at CPI inflation for 2027/28 and 2028/29, so the real figure will be close.

2027 Business Rates Relief & After-Tax Profit Calculator

From 1 April 2027, qualifying retail, hospitality, and leisure properties in England with a rateable value up to £18,000 will pay zero business rates—taking roughly 70,000 more high street businesses out of rates altogether, with tapered relief running up to £21,000. Created by Atlas Tax Advisors, this interactive dashboard helps you estimate your 2027/28 rates saving, model how tapered relief applies, and see what you actually keep once Income Tax, National Insurance, or Corporation Tax is factored in on the resulting profit increase. Simply adjust the rateable value slider, select your business structure (sole trader or limited company), and review the live visual charts and pre-April 2027 action checklist to plan your cash flow with confidence.

What is the saving worth after tax?

Business rates are an allowable business expense, so when your bill drops to zero your taxable profit goes up by the same amount. Atlas Tax Advisors' view is that this is the part of the announcement most owners will not have planned for.

Example: a hair and beauty salon in Milton Keynes has a rateable value of £16,500. In 2026/27 it gets no SBRR, so it pays £6,303 (£16,500 × 38.2p), assuming no transitional relief. From 1 April 2027 it falls inside the new £18,000 limit and pays nothing. Here is what the owner keeps of that £6,303, using the 2026/27 multiplier:

The answer changes at the edges. If the extra profit pushes a sole trader's income over the £50,270 higher rate threshold, part of the saving is taxed at 42% rather than 26%. If you take the money out of a company as a dividend, there is dividend tax on top.

Timing catches people out too. For a sole trader, the saving lands in the 2027/28 tax year, with the tax due by 31 January 2029. Because your payments on account for 2028/29 are based on your 2027/28 bill, the relief raises those as well.

The video with this article works through the salon example. Its conclusion is that a basic rate sole trader keeps roughly three-quarters of the saving, and that the extra tax should be set aside month by month from April 2027.

What could stop you getting the relief?

SBRR is for a business occupying one property, or one main property plus small additional ones. The GOV.UK guidance on business rate relief sets out the limits for additional properties. If you take on a second unit in 2027 that breaks those limits, the relief on your main property can go, so check before signing a lease. You must tell the council if you take on another property.

Two other limits apply. The relief is for the person who occupies the property and pays the rates. If you are a landlord, it goes to your tenant, and you pay empty property rates on a vacant unit after the first three months. And the Budget says the new thresholds will be kept under review alongside the 2029 revaluation. The Treasury costing shows the relief costing £315 million in 2027/28 and £320 million in 2028/29, but nothing in 2029/30. Plan on two years and treat anything beyond that as a bonus.

When it is worth getting the numbers checked

You can check your rateable value and your bill yourself. It is worth having the tax side worked out if your profit is close to £50,270, if you trade through a company and take dividends, or if you plan to open a second site. At that point the relief, the tax bands and the second-property rule pull in different directions.

Atlas Tax Advisors' small business accounts and Self Assessment service builds the zero rates bill into your 2027/28 profit forecast, works out your revised payments on account, and checks any expansion plans against the relief rules before you commit. We then prepare and file your accounts and tax return on that basis.

What to do before April 2027

1. By 31 December 2026: look up your property's rateable value on GOV.UK and check whether it sits between £15,000 and £21,000.

2. By 31 January 2027: if you are a sole trader, check whether your 2025/26 return and January payment on account already reflect your 2026/27 rates bill.

3. March 2027, when the 2027/28 bill arrives: check that SBRR has been applied. If it has not, contact your council, for example Milton Keynes City Council's business rates team if your premises are in Milton Keynes, and ask for it.

4. From April 2027: set aside the tax on the saving each month (around 26p in every pound for a basic rate sole trader).

5. Before taking on any new premises: check the second-property limits with your council.

DOWNLOAD FREE EXECUTIVE BRIEFING REPORT: Retail Business Rates, Tax Relief, and High Street Economic Reforms by Atlas Tax Advisors

FAQs

Do I need to apply for Small Business Rates Relief or is it automatic?

Many councils apply it automatically if they already hold the right information, but not all do. If your 2027/28 bill does not show the relief and your rateable value is £21,000 or less, contact your council and ask for it to be applied.

Can I get a refund if I have been paying business rates when I qualified for relief?

Councils can backdate relief where you met the conditions but it was not applied, but how far back is a matter for each council. Ask in writing, and keep copies of your bills and rateable value records.

Does zero business rates affect my VAT?

No. Business rates are outside the scope of VAT, so relief does not change your VAT return or registration position. It does change your taxable profit, which feeds into Income Tax or Corporation Tax.

I rent a chair in a salon. Do I get this relief?

Usually not. The relief goes to the person who occupies the premises and is liable for the rates, which is normally the salon owner. If your chair rent includes a share of the rates, any saving reaches you only if the owner passes it on through a lower rent.

Is the same relief available in Scotland or Wales?

No. This change applies to England only. Scotland and Wales set their own business rates reliefs, so check with your council there.

Disclaimer

The article content is checked against primary sources, including GOV.UK and HMRC guidance and manuals, and is reviewed at least annually. Worked examples and figures are illustrative and are included to show how the rules apply in principle. They are not a calculation of your own liability.

Tax is highly fact-sensitive. Small differences in circumstances, timing, residence, or structure can change the outcome significantly, and the rules themselves change frequently. This article is therefore general information and is not advice for your situation. You should not act, or refrain from acting, on the basis of this article alone. Atlas Tax Advisors accepts no liability for any loss arising from reliance on it without taking advice. For your specific situation, please contact us or any professional accountant.