UK Budget Aims to Exempt 70,000 More Businesses from Business Rates and Cap Bill Increases

Key Facts

The UK Budget package aims to exempt about 70,000 more businesses from business rates by expanding relief for small businesses, according to the Treasury. The government said half of retail, hospitality and leisure properties in England would pay no business rates under the package. The measure includes a cap on increases in bills for eligible properties during the 2027/28 and 2028/29 financial years. The cap is linked to consumer price inflation, so it does not mean bills will be frozen at current levels. Its scope is also limited to eligible properties in England and does not cover the hospitality sector across the whole UK.

The rules exclude increases in rateable value resulting from property improvements, as well as the loss of some reliefs, such as improvement relief or hardship relief, after 1 April 2026, according to the Ministry of Housing, Communities and Local Government. As a result, an eligible business’s bill could rise with inflation or if its rateable value increases because of development work, even during the cap period. The government is also expanding the small business rate relief thresholds for eligible retail, hospitality and leisure businesses. Properties with a rateable value of no more than 18,000 pounds will receive full relief, while relief will taper to zero at 21,000 pounds. These thresholds apply until 31 March 2029.

The Treasury said the changes would spare more than 14,000 restaurants from paying an additional 7,500 pounds in taxes over two years. It also expects 120,000 shops to avoid paying an additional 3,250 pounds over the same period. These estimates concern additional amounts businesses would otherwise have owed, not the elimination of all business rates they pay. Measures targeted at specific venues include an increase in relief for pubs, social clubs and most live music venues, excluding the largest. The increase is 20 percentage points, taking total relief to 35% in 2027/28 and 2028/29, according to the ministry.

The package comes as Whitbread, owner of the Premier Inn hotel chain, faces profit pressure from inflation and business rates costs. The company reported first-half adjusted pretax profit of 287 million pounds for fiscal 2027, compared with 316 million in the year-earlier period, a decline of 9%. In its results, the company cited cost inflation, including business rates, as well as temporary transition costs. By contrast, operating costs in the UK and Ireland remained at 834 million pounds, unchanged from the first half of fiscal 2026. Whitbread said efficiency savings helped offset inflation and business rates.

Whitbread had estimated before the latest budget that changes in earlier UK budgets would add between 40 million and 50 million pounds to its business rates costs in fiscal 2027. It said at the time that accelerating 60 million pounds of efficiency savings would help mitigate the impact. In the first half of fiscal 2027, the company said it had delivered savings of 39 million pounds and continued to expect 60 million for the full financial year. That figure relates to Whitbread’s announced efficiency programme and does not represent new tax savings provided by the budget. Management said it would provide further details on inflation and efficiency targets for the following year with its third-quarter results due in January.

In its interim results in October 2026, Whitbread said accommodation sales in the UK and Ireland rose 3% year on year and revenue per available room grew for the fifth consecutive quarter. It added that it continued to press the UK government to reduce previously announced business rates increases, to protect jobs and investment. The company’s five-year plan targets an additional 275 million pounds in adjusted pretax profit by fiscal 2031, compared with fiscal 2026. Whitbread said this contribution would exceed the expected 110 million pounds increase in business rates costs over the same period. The board reaffirmed its confidence in the full-year outlook after the interim results.

Whitbread shares closed at 2,737 pence on 28 October 2026, up from 2,592 pence the previous day, according to EL7 data. The data show closes of 2,581 pence on 22 October, 2,601 on 23 October and 2,605 on 26 October, before a close of 2,592 pence on 27 October. The close then rose to 2,737 pence on 28 October. These are daily closing prices and do not include intraday trading levels. The data alone do not identify the reason for the share move.