What does the pledge mean?

Business rates are a system of property taxes on most non-domestic properties, such as shops, pubs and offices. When Labour entered government in July 2024, the basic rate in England was 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 (since April 2026, the set valuation date has been 1 April 2024).
  
  
• The multiplier: a property’s rateable value is then multiplied by a ratio, expressed in pence per pound of rateable value. When Labour took office there were two multipliers. Businesses with a rateable value of £51,000 or more paid the standard multiplier of 54.6p in the pound, while those rated under £51,000, which are deemed small businesses, paid 49.9p in the pound.

This means, for instance, that a shop with a rateable value of £10,000 would have been 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 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. Business rates raised an estimated £27.6 billion in revenue 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 a “long-term project”, so we’re waiting to see what further changes are announced.

In the 2025 Budget, the then-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, hospitality and leisure (RHL) properties with rateable values below £500,000. These came into effect in April 2026:

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

These RHL rates are 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 was also 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 November 2025 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 would receive a 15% reduction in business rates bills from April 2026, followed by a two-year real-terms freeze, and “a review into the method used to value them for business rates”.

In his first week as Prime Minister, Andy Burnham announced a further 20% relief for pubs, clubs and live music venues from 2027/28, on top of the previously announced support.

These changes came 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 the Treasury told us: “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.”

In a July 2026 press release announcing the additional relief for live music venues, the government said: “We will return to our commitment to reform the wider business rates system, including Small Business Rates Relief, at the Budget.”