On 28 October 2026, the CIOT warned that changes to business rates reliefs announced in the Autumn Budget 2026 will create a’steep withdrawal slope’ that disincentivises small business expansion and investment. The government confirmed the extension of the Retail, Hospitality and Leisure (RHL) relief at 75% for 2026/27 but introduced a tapering mechanism that phases out relief sharply once rateable value exceeds £51,000. This creates a marginal effective tax rate spike for businesses growing past the threshold.
Key Takeaways
- Cliff-Edge Effect: A business with rateable value of £51,001 faces a significantly higher rates bill than one at £51,000, discouraging property improvements or expansion.
- Small Business Relief Taper: The small business rates multiplier and relief taper are tightened, increasing the cost of occupying slightly larger premises.
- Investment Disincentive: CIOT argues the taper undermines the government’s growth agenda by penalising businesses that invest in larger premises to scale up.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement