Small retail and leisure properties with rateable values less than £51,000 will benefit from higher relief, while properties with rateable values in excess of £500,000 will face a higher multiplier. This latter group represents less than 1% of all properties, but captures most large distribution warehouses, including those used by online retail giants. 

Transitional relief is expected to phase in large rateable value increases to cushion the impact; the industrial and logistics sector anticipates average increases of 21%, while the office sector around 6%.

Retail shops expect to see a modest average decrease of 0.6%, offering some relief; we predict that 75% of city centre retail units can expect to see their business rates reduced next spring. But with logistics costs rising and e-commerce giants absorbing higher multipliers, the real question is whether this reset will truly rebalance the scales between bricks-and-mortar and online retail.

E-commerce shifts and retail resilience

One of the aims is to create long-term certainty and support for high streets; approximately 27% of their trade has been lost to ecommerce (i.e. via logistics occupiers) over the last decade. The Government is keen to reverse the effects of the last rates review, including increasing voids and limited investment, which has placed pressure on parts of the retail and leisure sectors that stayed resilient during the pandemic.

Ripple effects across supply chains

However, the law of unintended consequences means the retail sector may still feel the pinch. E-commerce is no longer simply an online-versus-offline proposition. Most of the UK’s national brands operate in both spheres, often with significant shop estates and their own large warehouse estates, or requiring support from third-party logistics providers, who will likely pass on rising costs. Even smaller brands and independents depend on complex supply chains and could face increased shipping costs as a result.

Geography matters

Geography also plays a key role, with prime London retail likely to see little benefit. The key question is whether additional costs from rates linked to retail logistics will ultimately be passed on to the consumer. The key date for determining the exact impact by property type and size is likely to be laid out in, if not before, the Budget, when the Government will announce all multiplier rates for 2026–27 and details of its transitional relief scheme. 

There is still a possibility that retail shops over the £500,000 threshold may be exempt. All eyes are now on the Budget - retailers will be watching closely to see which way the rates swing.

Further information

Contact Tom Whittington or David Parker

Find out more about business rates here