'Super Tax' business rates multiplier threatens a £1.8bn hit to major employers

Avison Young’s analysis reveals office sector, and public services will bear the highest burden as government shifts relief costs from Treasury to large businesses.

Britain's largest commercial occupiers face a punitive new 'super tax' business rates multiplier from April 2026 that could damage UK competitiveness and deter investment, according to detailed research by Avison Young.

The property consultancy warns that the government's plan to switch its funding of retail, hospitality and leisure (RHL) relief by imposing a top-up multiplier on properties with rateable values over £500,000 will cost affected businesses a minimum £1.8bn annually. This represents a significant shift from public to private funding, implemented without consultation or meaningful impact analysis.

Rachel Reeves is set to announce the new multipliers on 26 November. From next April, England will move from two multipliers to five, marking a profound change in how business rates liability is distributed across sectors.

Avison Young projects that the total English rateable value pool will increase 15% from £70.6bn to £81bn in the 2026 revaluation. This rise is driven by three factors: removal of Covid-19 discounts affecting sectors such as hotels and pubs, increased build costs impacting public sector properties, and continued rental growth in industrial and logistics sectors.

Normally, such an RV increase would trigger proportional multiplier reductions. Avison Young estimates a 14% decrease would be appropriate, potentially dropping the standard multiplier from 55.5p to 48p. This presented an opportunity to reduce what is already the highest property tax rate among leading economies.

The government is now set to overhaul its approach to business rates relief for the retail, hospitality, and leisure (RHL) sectors, opting to replace the existing scheme with a targeted measure that maintains lower multipliers only for properties with a rateable value (RV) below £500,000.

This new approach will be funded entirely by larger businesses, which face a “super tax” multiplier on properties assessed above the £500,000 threshold. Initially, the Chancellor had chosen to exclude high-value RHL properties, a move that Avison Young estimates would have cost larger RHL businesses £356 million—effectively subsidising smaller RHL operators.

However, there are signs the government may be reconsidering. Sources suggest officials are now exploring the possibility of extending lower multipliers to all RHL properties, regardless of RV. If adopted, this shift would mark a significant policy reversal.

Yet such a change would come at a cost. The government would need to impose an even steeper super tax multiplier across all other large businesses. Avison Young warn this could range from 7.5p to 9.4p, depending on how aggressively the Treasury pursues the measure.

Avison Young’s, research reveals that the office sector will bear the heaviest burden, facing anywhere between £552m and £691m in additional costs. This contradicts government claims that the changes level the playing field between online retail and traditional shops. Logistics operators, including e-commerce giants, will be far less affected than office-based businesses.

Public sector occupiers will also suffer significantly. Health and education properties will face between £240m and £280m in extra costs. Specialist infrastructure providers including airports, telecoms networks, water companies, Network Rail and Transport for London will collectively absorb far more at between £570m and £750m.

The system creates extreme cliff edges. An office currently assessed at £499,999 RV will face an £80,000 annual liability increase if its value rises by just £1 after April 2026.

David Jones ,Head of Rating at Avison Young, said: "The 2026 revaluation presented an ideal opportunity for government to drive down the tax rate and make Britain more competitive for all. Instead, we're seeing costs shifted from the public purse to specific large business sectors, with no meaningful consultation or impact analysis.

"Location decisions often come down to marginal differences. Adding a super tax multiplier to what is already the highest property tax rate among leading economies, risks making Britain less attractive to investors. The sectors most exposed are often at the forefront of driving productivity, innovation and growth. That can't be good for UK plc."

The firm warns of unintended consequences. In strong markets, lower business rates may simply create space for higher rents. At subsequent revaluations, rateable values will increase accordingly, potentially negating the benefits of lower multipliers. Conversely, higher multipliers could depress rents, ultimately reducing liabilities at future revaluations.

Avison Young continues to propose a costed approach to deliver a single 40p multiplier over this parliament, bringing the UK closer to international norms.

For more information on how Avison Young can help with your business rates, please click here.