Small shops and salons: no business rates up to £18,000

From 1 April 2027, a shop, café, salon or other retail, hospitality or leisure business in England is set to pay no business rates if its property has a rateable value of £18,000 or less and it is the only property the business uses. Today that line is £12,000. Under the plans, relief then tapers evenly from £18,000 to nothing at £21,000, where today it tapers from £12,000 to nothing at £15,000. The Budget on 28 October announced the change, the regulations are still to be made, and the government expects around 70,000 more high street businesses to pay nothing.

Who qualifies

The higher thresholds apply only to properties that count as retail, hospitality or leisure under the business rates rules. Other small businesses keep today's £12,000 and £15,000 lines. Vape shops lose small business rate relief altogether from April 2027.

The government's letter to councils says the new thresholds will run until 31 March 2029 and will be reviewed at the 2029 revaluation. It also replaces the combined limit for businesses with more than one property, now under £28,000 in London and under £20,000 elsewhere, with a single limit of £29,999 for England.

A salon in Walthamstow

Illustration, not a real client. A hair salon in Walthamstow trades from one unit with a rateable value of £16,000. It qualifies as retail, hospitality or leisure.

• 2026 to 2027: it is above the £15,000 line, so it gets no small business rate relief. At the small business retail, hospitality and leisure multiplier of 38.2p, the bill is £6,112.

• From April 2027, under the plans: it is below £18,000, so it gets full relief. The bill is nil.

A café nearby with a rateable value of £19,500 sits halfway up the new taper, so it gets 50 per cent relief. At next year's multiplier of 39.5p, its bill falls from £7,449 today to about £3,851. All the figures here leave out transitional relief, Supporting Small Business relief and any supplement that applies to a particular bill.

Larger premises

Qualifying retail, hospitality and leisure properties above the new thresholds get a different kind of help. Their bills for 2027 to 2028 and 2028 to 2029 are to be frozen in real terms, which means increases capped at inflation. Pubs and most live music venues are to get 35 per cent relief in those two years.

What to do now

Find the rateable value on your bill. If your property counts as retail, hospitality or leisure, its rateable value is above £15,000 but below £21,000, and you get no small business rate relief today, April 2027 is when that should change. The gov.uk guidance on small business rate relief tells you to contact your council if you think you are eligible and are not getting it. If you run a salon, the tax side of running a salon covers the rest of a salon's tax year.

About the author

Harvey Dhillon is Founder and CEO of Zmartly, an accountancy firm for small businesses. He grew up in West London and began his career in finance at Barclays, in investment banking and wealth management, before going full-time on Zmartly in 2020.

Featured photo by Max Vakhtbovych on Pexels.