What does the pledge mean?

Business rates are a system of property taxes on most non-domestic properties, such as shops, pubs and offices. The basic rate in England is currently determined by:

• A property’s rateable value: an estimate by the Valuation Office Agency of how much it would have cost to rent a property for a year on 1 April 2021 (these are reviewed every three years, with the next revaluation set to take place in 2026 using 1 April 2024 as the set valuation date).
  
  
• The multiplier: a property’s rateable value is then multiplied by a ratio, expressed in pence per pound of rateable value. There are currently two multipliers. Businesses with a rateable value of £51,000 a year or more pay the standard multiplier of 55.5p in the pound, while those rated under £51,000, which are deemed small businesses, pay 49.9p in the pound.

This means, for instance, that a shop with a rateable value of £10,000 would be liable for a basic annual rate of £4,990 (£10,000 multiplied by the small business multiplier of 49.9p in the pound).

There are also various types of relief from the tax, depending on the function of the business and its size, while some establishments—such as agricultural buildings and places of worship—are exempt.

Business rates are collected by local authorities, who keep around half of them to fund local services. The other half goes towards central government. Business rates are devolved in Scotland, Wales and Northern Ireland, so this pledge refers only to England.

Labour’s manifesto did not detail what specific changes would be made to make business rates “fairer”, but said: “This new system will level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.

Prior to the election, the party said it would “scrap” the current system “and replace it with a fully costed and fully funded system of business property taxation that is fit for the 21st century”. It referred to a “new system”.

Labour has also committed to ensuring any replacement system can raise “the same revenue” as the current system. Local authorities in England have estimated business rates will bring £27.8 billion in 2025/26.

What progress has been made?

We are currently rating this pledge as “wait and see”. The 2025 Budget included changes to the multipliers used to calculate business rates in England, but did not fully replace the system with something else. The Treasury has not detailed what other changes are planned, but has said its “reform” of business rates is as a “long-term project”, so we’re waiting to see what further changes are announced.

In the 2025 Budget, the chancellor Rachel Reeves said the changes to the multipliers would result in "permanently lower tax rates for over 750,000 retail, hospitality and leisure properties”.

The government said it was introducing two “permanently lower business rates multipliers” specifically for eligible retail, leisure and hospitality (RHL) properties with rateable values below £500,000. These will come into effect from April 2026:

• the small business RHL multiplier will be 38.2p in the pound for properties with rateable values under £51,000
• a standard RHL multiplier will be 43p in the pound for properties with rateable values between £51,000 and £499,999.

These RHL rates will be 5p lower than the 2026/27 national multipliers—how much other businesses will pay (43.2p for small businesses and 48p for the standard multiplier).

A high-value business rates multiplier of 50.8p will also be introduced in 2026/27 for properties with rateable values of over £500,000 (around 1% of properties, according to the government). Legislation giving the government the powers to introduce these changes was passed in April 2025 after Ms Reeves first mentioned the government’s intention to do this in the Autumn Budget 2024.

The Office for Budget Responsibility (OBR) noted in its forecast that due to these changes as well as extensions to measures allowing specific local authorities to keep higher proportions of business rates revenue, receipts are expected to be reduced “by £1.2 billion on average between 2026/27 and 2028/29, but are broadly neutral by the end of the forecast as the transitional relief package and local retentions are due to expire".

A 100% business rates relief for eligible electric-vehicle (EV) chargepoints and EV-only forecourts for 10 years was also announced in the 2025 Budget.

In January 2026, the government announced pubs and “grassroots live music venues” in England will receive a 15% reduction in business rates bills, followed by a two-year real-terms freeze, and “a review into the method used to value them for business rates”.

These changes are all due after the government began discussions with business leaders and other stakeholders in October 2024 on “how the government can best deliver” a “transformed system of business rates” over the course of the parliament.

In its September 2025 interim report, the government said it was exploring the case for further changes. These included moving to a “slice” approach to business rates—a marginal tax rate system, where successive bands are taxed at increasing rates—and strengthening small business relief.

A press release said this report provided a “blueprint to reform business rates to incentivise investment”.

In February 2026 HM Treasury told us: “We are a pro-business government that is creating a fairer business rates system to protect the high street, support investment, and level the playing field. We will introduce permanently lower tax rates for retail, hospitality, and leisure properties from April that will be sustainably funded by a new, higher rate on less than 1% of the most valuable business properties.

“Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, and we have set out our long-term plans to reform the system to support businesses to expand – this is a long-term project that will run for the whole Parliament.”