Tackling the UBR - from problem to solution
Business Rates: Assessing the impact of the 2026 revaluation
CHANGES IN RATEABLE VALUE POOL
England
CHANGE IN RATEABLE VALUE POOL
Wales
CHANGE IN RATEABLE VALUE POOL
2023
2026
2023
2026
UBR PREDICTIONS
UBR PREDICTIONS
2025/26
▼
2026/27
2025/26
▼
2026/27
ENGLAND
- The UBR - Standard multiplier will fall from 55.5p to 47.7p.
- Of the three largest sectors performance has been mixed:
- The retail sector has stabilised following previous substantial decline in values.
- The industrial sector will experience the largest increase, with logistics seeing values increasing by 25% in England.
- The office sector has seen modest growth going into the 2026 revaluation.
WALES
- Avison Young predicts above trend increases across specialist sectors.
- We also predict that the RV pool in Wales will increase 10.8% from £2.65bn in 2023, to £2.94bn in 2026.
- Consequently, Avison Young expects the Welsh UBR to drop from 57.1p to 50.8p at the start of the 2026 rating list.
- Trends in Wales closely align with those experienced in England, with substantial growth in the industrial sector (average 14.7%), limited movement in offices (1% growth) and a marginal decline across retail (-1.7%).
AVISON YOUNG KEY ASKS FROM GOVERNMENT
Following on from the Autumn Budget 2024 and the government paper ‘Transforming Business Rates’, we review the impact on the business rates system.
1. A commitment that by the 2029 election the Govt will have tackled the excessive tax rate and delivered a uniform business rate no higher than 40p. Rachel Reeves needs to announce at this October’s budget to decouple the tax from annual inflationary increases and use the RV pool increase we forecast for the 2026 revaluation to drive down the base level UBR (small business multiplier).
We welcome the intention to introduce a permanently lower multiplier for retail, hospitality and leisure (RHL) properties with a RV below £500,000 from April 2026-27. This is a clear indication the government accepts that excessive multipliers are impacting the RHL sector. We are however concerned by the intention to fund this through a higher multiplier for properties with RV’s greater than £500,000. This is clearly a move by government to pass the £2bn per annum cost of the current RHL relief onto big businesses. We continue to urge government that by 2029 it must deliver a UBR no higher than 40p for the benefit of all UK business.
Within the ‘Transforming Business Rates’ paper sections 3.20 & 3.21, it is illuded to that the government are considering breaking the link between business rates liabilities and annual inflation, although this is unclear. We continue to urge the government to decouple the tax from annual inflation and ensure liabilities only grow in line with property values.
2. To maintain an upwards transitional adjustment scheme for the 2026. Avison Young forecasts that many sectors will face significant increases in RV for the 2026 revaluation. It is vital that the government maintains an upwards transitional scheme to phase in the largest increases, sectors such as logistics, hotels, leisure and large infrastructure being the worst affected. As with the 2023 revaluation we ask for the government to fund this scheme outside of the business rates system and not reintroduce a downwards transitional adjustment scheme, the abolition of which proved so important to the retail sector.
There was no reference to an upwards transitional adjustment in either the Autumn Budget or ‘Transforming Business Rates’ paper. We continue to urge government to maintain a scheme that has been in place since 1990.
3. Extend improvement relief. The current scheme provides a 1 year rate holiday for ratepayers on increases in liability arising from extensions and improvements. Extend the scheme to 2 years and include landlord liabilities so they can work with incoming occupiers to meet exacting carbon reduction targets.
Within the ‘Transforming Business Rates’ paper the government is seeking views as to the efficacy of the improvement relief scheme introduced in April 2024. We continue to urge the government to extend the period of relief and to include landlord liabilities within the scheme.
4. The government to undertake a thorough review of empty rates. It is not necessary to penalise landlords where space has longer term vacancy. The government should introduce a system which incentivises landlords/developers to invest and encourage earlier reoccupation of the vacant stock.
Within the ‘Transforming Business Rates’ paper the government have sought comment on the efficacy of Empty Property Relief in supporting landlords to make improvements. This is positive and indicates the government are reviewing the current system and we continue to urge them to stop penalising landlords and incentivise investment into empty properties.
5. We urge government to ensure that the VOA undertakes a detailed testing and roll out phase for Duty to Notify. This will be extremely onerous and costly to ratepayers. We consider that full implementation must be delayed to at least 2027, which will still provide the VOA with the necessary data gathering requirements to value for the 2029 revaluation.
The government have listened to our concerns over the readiness of the Duty to Notify system and have revised the timelines of its implementation, with a phased introduction now beginning in April 2026 and not being formally mandated until April 2029. We will continue to work with the government to ensure a system is developed that works for business.
6. Digitalisation the Business Rates system. Current IT infrastructure is antiquated and unfit for purpose with no links between the Valuation Office Agency and billing authority systems. The government must invest in the business rates system and digitalise the tax so ratepayers have a single site to review their valuations and pay their business rates.
The government is trying to digitise the business rates system through the ‘Digitalising Business Rates’ (DBR) project, aiming to match property level business rates data with HMRC business level data. Within the ‘Transforming Business Rates’ paper, the government have confirmed their intention to deliver this programme by March 2028. We continue to urge the government to be more ambitious and develop a single system from which ratepayers can manage all aspects of the business rates system, reducing the burden on ratepayers.
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