2026 Draft Rating List: What’s Next for Business Rates?
With the draft 2026 rating list set for release on Wednesday 26th November, we’ve analysed the likely implications based on the government’s recent policy paper, Resetting the Business Rates Retention System from 2026 to 2027.
This outlines fundamental reforms to how business rates income is distributed and managed by local authorities. From revaluation changes to a redesigned levy system, here’s what businesses should be preparing for.
Major Redistribution of Business Rates Income
From April 2026, the government plans to “reset” how business rates income is shared across local authorities.
This isn’t just a tweak. A lot of the growth local councils have kept will be redistributed based on “relative need” using new formulas.
New “Business Rates Baselines” (BRBs) and “Baseline Funding Levels” (BFLs) will be set for each local authority.
Protection During Transition
To ease the shock, local authorities’ current business rates income will be protected through “transitional arrangements.”
For 2026-27, they’re proposing to raise the safety net to 100% of the new BFLs, meaning no authority should fall below its baseline in that first year after reset.
Over time (2027-28, 2028-29) the protection will be scaled back to more normal levels (e.g. 97%, then 92.5%).
Levy Redesign (on Growth)
The “levy” on business rates growth is being restructured: instead of a flat rate, they’ll use a marginal levy system (like income tax bands).
This means early growth is taxed less heavily, stronger reward incentives remain, and risk is more evenly shared.
New Business Rates Multipliers + Revaluation
From April 2026, there will be new multipliers in the business rates system, including:
A High Value Multiplier (HVM) for properties valued at £500K+.
Two lower multipliers for retail, hospitality, and leisure (RHL) properties.
There will also be a full business rates revaluation in 2026. To simplify things, compensation for reliefs (e.g. reliefs awarded to businesses) will be paid via s.31 grants, routed through local authorities’ Collection Funds.
Accounting & Administration Overhaul
The system of how s.31 grants (compensation) are accounted for is changing: from 2026, they flow through Collection Funds — this should clean up how local government manages its business rates finances.
Local authorities will need to adjust how they report business rates (via their NNDR data collection) because of the new multipliers.
For “Designated Areas” (DAs) and renewable energy schemes, which are currently exempt from the reset, there are also changes in how reliefs will be compensated.
What This Could Mean (if Announced)
Winners & Losers Among Councils: Some local authorities will gain more funding, others less — depending on how “need” is recalculated.
More Predictable Income: Councils get more certainty in the short term (thanks to the 100% safety net), which helps them plan.
Growth Still Pays: Local growth remains valuable — but it’s “taxed” more fairly under the new levy.
Smoother Tax System: The new multipliers + revaluation + streamlined grant compensation should reduce complexity in the long run (for councils and businesses).
Risk Management: By redesigning risk (levy + safety net), the government is trying to balance reward for growth with protection against volatility.
