Draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2026 Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

(Limited Text - Ministerial Extracts only)

Monday 2nd February 2026 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[The Chair]

With this it will be convenient to consider the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[Dan Tomlinson]

The regulations prescribe the circumstances in which the new retail, hospitality and leisure and high value business rates multipliers will apply.

It is a pleasure to see you in the Chair, Dr Murrison—[Hon. Members: “No!”] No? Oh, that is totally wrong; who have we got in the Chair? [Hon. Members: “Mr Mundell.”] Mr Mundell—that’s right. Forgive me for my sins; I know not what I do. Members will be glad to know that I do not plan on speaking for 15 minutes today, as I did in the Chamber the other day.

The regulations give effect to the new business rates multipliers for qualifying retail, hospitality and leisure and high-value properties. This is the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. At the Budget we announced a comprehensive set of reforms to business rates. We have created a new, fairer system with permanently lower multipliers for RHL properties with rateable values below £500,000. The scope of these new multipliers is broadly the same as that of the current RHL relief. These new multipliers will be 5p below their national equivalents, but when combined with the outcomes of the revaluation, the tax rate that RHL properties on the small business multiplier pay next year will fall by nearly 12p and the rate for RHL properties on the standards multiplier by 12.5p.

It is important that we make support for the high street sustainable, so we are funding these new multipliers through higher rates on the top 1% of properties—those with rateable values of £500,000 and above. The higher multiplier will be only 2.8% above the national standard multiplier, meaning that properties in its scope will pay a reasonable tax rate too. These new rates will be worth almost £1 billion a year and will benefit more than 750,000 RHL properties. They will mean that from April, the most valuable properties, such as large distribution warehouses occupied by online giants, will pay a tax rate 33% higher than that for small high street properties.

The new business rates multipliers being brought into force by these statutory instruments are the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. I commend them to the Committee—and forgive me, Mr Mundell.

[The Chair]

Forgiven.

--- Later in debate ---

[Dan Tomlinson]

In response to the points raised by the shadow Minister, it is worth emphasising that the decision to introduce new tax rates to the system means that, for the first time, a typical high street business now has a lower multiplier—a lower tax rate—than the online giants and the larger properties. The tax rate on larger properties is 33% higher than the rate paid by a smaller property on the high street. That significant difference is the first step in the reforms that we have implemented to business rates.

I will not make the point that the previous Government would have removed the reliefs overnight, but I will say that if they were planning on keeping them, I do not understand why that information was not in the documents that the OBR published in advance of the general election. If the shadow Minister will not concede that his Government would have got rid of the reliefs overnight, he seems to be suggesting that there was a multibillion-pound unfunded tax cut that they did not tell us about before the election. I am not sure which he would prefer.

In advance of the Budget, we considered the inclusion of large retail stores within the high-value multiplier. It is really encouraging that Sainsbury’s, the Co-op, Iceland and other large retailers have welcomed our getting the balance right in the business rates system and setting the multiplier at a rate that has allowed some shops to reduce prices, or at least hold down price increases for consumers, because of the changes that we made and the proportionate way in which we went about making them.

We are committed to going further to reform the business rates system. At the Budget, we published a call for evidence on how to remove further barriers to investment. Transforming business rates is a multi-year process. The Government remain firmly committed to collaborating with stakeholders and with businesses small and large to achieve further meaningful change in the business rates system.

Question put and agreed to.

Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

Resolved,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.—(Dan Tomlinson.)