UK Business Rates Retail, Hospitality and Leisure Relief 2026/27

Business rates are one of the most significant fixed costs for retailers, hospitality operators, and leisure businesses. Unlike rent, which can be negotiated, or staffing costs, which flex with trade, business rates continue regardless of how busy or quiet a period is. Government support through the Retail, Hospitality and Leisure (RHL) Relief scheme has provided meaningful help to these sectors since the pandemic, and the scheme has continued in various forms into 2026/27.

This guide explains how the RHL relief works, which properties are eligible, how much relief is available for 2026/27, how the scheme interacts with other reliefs, and what businesses need to do to benefit.

What Is the Retail, Hospitality and Leisure Relief?

The RHL Relief scheme is a discretionary relief provided by central government and delivered by local billing authorities (councils). It reduces the business rates bill for eligible properties in the retail, hospitality, and leisure sectors.

The scheme was introduced in response to the challenges facing these sectors -- initially during the COVID-19 pandemic (where 100% relief was provided) and then at reduced rates as the economy recovered. Government has continued the scheme at varying percentages in subsequent years because these sectors continue to face significant structural pressures: changing consumer behaviour, high energy costs, increased competition from online retail, and rising costs generally.

For 2025/26, the RHL relief was set at 40%, subject to a cash cap of £110,000 per business. For 2026/27, businesses should check the most recent government confirmation of the rate -- announced at Autumn Budget or in subsequent business rates guidance -- as the percentage can change year to year. This guide uses the 40% / £110,000 framework as the most recently confirmed figures; confirm the exact 2026/27 position with your local authority or at gov.uk.

How Much Relief Is Available?

The RHL relief reduces the rates bill by a specified percentage. Under a 40% relief scheme, a business with a rates bill of £50,000 before relief would see it reduced to £30,000 (saving £20,000).

The £110,000 cash cap per business is the more important constraint for larger operators. This cap applies across all properties occupied by the same business, not per property. A national retail chain with 100 shops receiving the relief would hit the £110,000 cap quickly -- in fact, at a 40% relief rate, the cap bites once the combined pre-relief rates bill across all properties exceeds £275,000. For smaller independent operators with one or a few properties, the cap is less likely to be relevant.

For independent retailers, restaurants, or gyms with a single premises, the cap is rarely an issue -- their entire saving from the RHL relief will typically fall well within £110,000.

Which Properties Are Eligible?

To qualify for RHL relief, a property must be:

1. In England (Scotland, Wales, and Northern Ireland have their own equivalent schemes)
2. Occupied (empty properties do not qualify)
3. Used wholly or mainly for qualifying purposes

The qualifying uses are broadly defined and include:

Retail. Shops, stores, and market stalls. This includes supermarkets, convenience stores, charity shops, opticians, pharmacies (the retail element), hairdressers and barbers, estate agents, travel agents, and similar premises where goods or services are sold primarily to visiting members of the public.

Hospitality. Pubs, wine bars, restaurants, cafes, coffee shops, sandwich shops, fast food outlets, drinking establishments, and hotel restaurants. This is broadly any premises where food and drink are sold for consumption on or near the premises.

Leisure. Cinemas, theatres, concert halls, bingo halls, gyms, swimming pools, spas, amusement arcades, bowling alleys, museums, art galleries, nightclubs, and similar venues where leisure activities take place. Sports grounds, stadia, and some visitor attractions also qualify.

Properties that are NOT eligible include: offices (unless used as a headquarters for a qualifying business, in which case specialist advice is needed), factories, warehouses used primarily for storage or distribution rather than retail, car parks, petrol stations (though the associated shop/cafe may qualify), banks and financial services offices, and professional services premises (accountants, solicitors).

Mixed-use properties are assessed on their predominant use. A property that is 90% office and 10% cafe is unlikely to qualify -- the qualifying use must be the primary use.

How Is the Relief Applied?

Unlike some reliefs that require a formal application, the RHL relief is applied automatically by the local billing authority for most businesses. When the local authority calculates your rates bill for the year, it should already reflect any applicable RHL relief.

If you believe you are eligible but your bill does not show the relief, contact your local authority's business rates team. You may need to confirm the nature of your business use. In some cases, particularly for mixed-use properties or unusual business types, the council may need additional information.

It is worth checking your rates bill carefully each April when it is issued for the new financial year. Errors in relief application do occur, and it is the ratepayer's responsibility to check and query incorrect bills promptly.

Small Business Rates Relief (SBRR) and How It Interacts

Small Business Rates Relief provides 100% relief from business rates for properties with a rateable value below £12,000, and tapered relief for properties with a rateable value between £12,000 and £15,000. It applies across all business types, not just retail and hospitality.

The interaction between SBRR and RHL relief requires care:

• If a property qualifies for 100% SBRR, there are no rates to pay and RHL relief adds nothing further
• If a property qualifies for partial SBRR (because RV is between £12,000 and £15,000), the RHL relief may be applied to the remaining bill after SBRR
• If a property's RV is above £15,000, SBRR does not apply and RHL relief is calculated on the full rates bill
• A business can only claim SBRR on one property (the main property) -- owning or occupying multiple properties affects SBRR eligibility

Businesses should check both reliefs apply where eligible -- for a small independent retail property in the £12,000 to £15,000 RV band, combining partial SBRR with RHL relief can reduce the rates bill significantly.

Rural Rate Relief

Properties in rural areas (villages with a population below 3,000) may also qualify for Rural Rate Relief -- 100% mandatory relief for the sole village general store, post office, and petrol station; and up to 100% discretionary relief for other rural businesses. Rural Rate Relief and RHL relief are separate and can potentially be combined, though the total cannot exceed the rates bill.

Mandatory vs Discretionary Reliefs

Business rates reliefs fall into two categories:

Mandatory reliefs. The local authority is legally required to apply these -- SBRR below £12,000 RV, Charity relief, and mandatory rural relief are examples. The local authority has no discretion to refuse.

Discretionary reliefs. The local authority can choose whether to apply and in what amount -- discretionary rural relief and some transitional arrangements are discretionary. RHL relief is technically discretionary relief funded by central government grant to local authorities, which is why it can be set at different rates each year and why councils technically have to adopt it.

In practice, virtually all councils apply RHL relief in line with the government scheme -- the funding is provided centrally so there is no cost to the council and little reason not to apply it.

Empty Property Rates

Properties that are empty (unoccupied) are subject to different rules:

• 3-month exemption from empty property rates for most commercial properties
• 6-month exemption for industrial properties (factories, warehouses)
• After the exemption period, full business rates apply (at 100% of the liability)

Empty properties do not qualify for RHL relief or SBRR. If a retail unit is vacant, the ratepayer (usually the owner) faces full rates after the 3-month exemption. This is a significant ongoing cost for landlords with empty units and creates pressure to let properties at lower rents rather than leave them vacant.

There are some additional exemptions for empty properties -- listed buildings are exempt indefinitely while empty, and properties where occupation is prohibited by law are also exempt.

Business Rates Revaluation

Business rates are based on the "rateable value" (RV) of the property -- an estimate of the annual rent the property would achieve if let on the open market at the valuation date. RVs are set by the Valuation Office Agency (VOA) and are updated periodically through revaluations.

The most recent revaluation in England took effect from 1 April 2023, using a valuation date of 1 April 2021. This meant RVs were set based on rental levels at April 2021 -- during the pandemic -- which had complex effects on different types of property.

The next revaluation is due to take effect from 1 April 2026, with a valuation date of 1 April 2024. This revaluation will reset RVs based on 2024 rental levels. Retail and hospitality businesses should check their new RV when it is published (provisional RVs for the 2026 revaluation should be available ahead of April 2026) and consider appealing if the RV appears too high.

The Business Rates Multiplier 2026/27

The rates bill is calculated by multiplying the RV by the business rates multiplier (also called the poundage). For 2026/27, the standard multiplier is set by government each year in line with CPI (previously RPI). For reference, in 2025/26 the standard multiplier was 55.5p and the small business multiplier was 49.9p.

The small business multiplier applies to properties with an RV below £51,000, where the ratepayer occupies only one property. The standard multiplier applies to larger properties or ratepayers occupying multiple properties.

The calculation:

• Rates bill = Rateable Value multiplied by multiplier
• After relief: Rates bill after relief = (RV x multiplier) x (1 minus relief percentage)
• For a property with RV of £30,000, standard multiplier 55.5p, and 40% RHL relief: (£30,000 x 0.555) x 0.6 = £16,650 x 0.6 = £9,990

Frequently Asked Questions

Do I need to apply for RHL relief separately? In most cases, no. Local authorities apply the relief automatically to eligible properties. However, if your bill does not show the relief or you believe you may be eligible and have not received it, contact your local authority's business rates team.

Does RHL relief apply in Scotland, Wales, and Northern Ireland? The RHL relief described here applies in England. Scotland, Wales, and Northern Ireland have devolved business rates systems and their own equivalent support schemes, which may differ in percentage, eligibility criteria, and administration.

Our property is half shop and half warehouse. Do we qualify? Eligibility depends on the predominant use. If the majority of the floor area is used for retail purposes with customers coming in to buy, it may qualify. A primarily storage or distribution function would not. Mixed-use cases can be complex -- discuss with your local authority.

We have two retail shops. Does the £110,000 cap apply per shop or in total? In total across all your properties. The cash cap is per business, so if relief on both shops combined exceeds £110,000, you will need to notify your local authority and the excess will not be applied.

Can a business rates valuation be challenged? Yes. If you believe your rateable value is too high, you can challenge it through the Check, Challenge, Appeal process via the Valuation Office Agency. The check must be completed before a challenge, and a challenge before an appeal. The process can be lengthy but successful challenges can result in reduced bills backdated to the start of the rating list.

Is there transitional relief to cushion the impact of the 2026 revaluation? Government typically introduces transitional relief arrangements when revaluations create large increases or decreases in bills. Details for the 2026 revaluation-linked transitional relief will be confirmed by the government closer to April 2026. Businesses facing large increases should monitor announcements.

Do rates relief schemes apply to businesses operating from home? Home offices are generally residential property for rates purposes and are subject to council tax rather than business rates. If part of a home is used exclusively for business purposes, it may be subject to business rates on that portion, but this is rare and the amounts are typically small enough to be fully covered by SBRR.

What happens if we move out before the relief period ends? RHL relief attaches to the property, not the business. If you vacate, relief stops on the date you cease occupation. The new occupant would need to be assessed for eligibility in their own right.

Are pop-up shops or market stalls eligible? Pop-up shops in occupied premises may be eligible if the premises are separately assessed for business rates. Market stalls assessed for business rates in their own right can also qualify if the use is retail. Temporary arrangements need to be assessed on their specific facts.

What if I disagree with my rates bill? Always pay first and dispute second -- failing to pay business rates can lead to enforcement action (magistrates' court summons, bailiff action, or insolvency proceedings) even while a dispute is ongoing. Contact your local authority to query any bill you believe is incorrect, and separately consider whether to challenge the underlying rateable value through the VOA process.