Cliff Edges in Business Rates: Why the New Multiplier System Could Cost You

The UK government’s new tiered business rates multiplier system, introduced under the Non-Domestic Rating (Multipliers and Private Schools) Act 2025, promises reform. But behind the headlines lies a potentially costly change for property owners.

From 2026, a new high-tier multiplier will apply to all commercial properties with a rateable value (RV) of £500,000 or more, and it could result in substantial tax hikes for properties that cross this threshold.

Understanding the New Multipliers

The updated structure introduces:

• Lower multipliers for properties with RVs below £500,000 (potentially up to 20p less than the small business multiplier).

  
  

• A higher multiplier for all properties with RVs of £500,000 or above, potentially up to 10p above the standard multiplier.

  
  

This reform builds permanent differential treatment into the core system, replacing the existing Retail, Hospitality and Leisure (RHL) relief.

The Hidden Risk: The ‘Cliff Edge’ Effect

A major concern is the continued use of a slab model. The entire value of a property is taxed at the higher rate once the £500,000 threshold is crossed.

• A property with an RV of £499,999 is taxed at the lower rate.

• A property with an RV of £500,001 sees its entire value taxed at the higher rate.

A £2 increase in valuation could cost thousands more per year — creating a cliff edge, rather than a fair, gradual increase.

Why It Matters for Large Property Owners

This affects any large property, including office complexes, retail units, distribution centres, or high-value commercial spaces. Even small fit-outs or improvements can trigger a revaluation that tips a property over the £500,000 threshold, leading to disproportionate increases in liability.

When Investment Gets Punished

This model risks disincentivising growth. Both occupiers and landlords may delay improvements or expansions, fearing a revaluation could push them into the high-tier bracket.

CPA’s Approach: Protect Your Property Value

Until a fairer system is introduced, the best protection is to proactively review your property’s rateable value. At CPA, we can help you:

• Check for inflated or inaccurate valuations.

• Reduce your RV below the £500,000 cliff edge, if possible.

• Manage appeals from start to finish risk-free.

With a free RICS-regulated survey and a no win, no fee policy, you have nothing to lose — and potentially tens of thousands to save.

Act Now

If your property’s RV is close to or above £500,000, now is the time to act. A small RV reduction could prevent a massive tax hike from 2026.

Contact CPA today for a free review and see how much you could save.