Budget 2026 and business rates in Devon: who pays nothing from April 2027, and what it means for owning your premises

From 1 April 2027, a small shop, café or salon in England with a rateable value up to £18,000 can pay no business rates at all, up from a £12,000 threshold today. For Devon, where the economy leans heavily on independent retail and hospitality in market towns and on the coast, that is one of the most practical measures in Budget 2026. This article explains who now pays nothing, how the taper works, what the two-year CPI cap does to bills, and why lower running costs strengthen the case for a business owner to buy the premises rather than keep renting.

The new Small Business Rates Relief thresholds

The Budget changes Small Business Rates Relief (SBRR) for retail, hospitality and leisure (RHL) properties only. "The threshold for 100% relief will increase to a rateable value of £18,000, and the threshold for tapered relief will increase to a rateable value of £21,000" (Budget 2026, para 6.190). The previous thresholds were £12,000 and £15,000. The change applies from 1 April 2027 and will be "kept under review alongside the 2029 revaluation".

In plain terms:

• Rateable value up to £18,000: a qualifying RHL property gets 100% relief, so no business rates bill.
• Rateable value between £18,000 and £21,000: relief tapers, so the bill rises gradually rather than jumping from nothing to the full amount.
• Above £21,000: no SBRR, although the CPI cap described below may still apply.

The Treasury expects the change to take "around 70,000 more high street businesses out of business rates", including an additional 3,500 pubs, 3,900 restaurants, 2,200 cafés and 1,700 hairdressers and beauty salons (Budget 2026, para 3.22). It also says "half of all RHL properties in England will not pay business rates at all" (Budget 2026, para 3.23).

Two points of detail matter. First, the higher thresholds apply only to RHL properties. An office, a workshop or an industrial unit on a Devon trading estate stays on the existing SBRR thresholds. Second, SBRR has always come with conditions, the main one being that the business usually occupies only one property, with limited exceptions. Check how your council applies those rules before assuming the relief.

Who in Devon stands to benefit

Devon's commercial map is made up of exactly the kind of premises this measure targets: the bakery and the gift shop on a Totnes or Tavistock high street, the café on a seafront in Torbay, the hair salon in Newton Abbot, the pub in a moorland village, the restaurant on a harbour in Salcombe or Dartmouth, the independent retailer in Barnstaple or Honiton.

The Budget does not publish figures for Devon, so the only honest local statement is this: if your premises are RHL and the rateable value on the 2026 list sits between £12,000 and £21,000, the change from April 2027 is likely to reduce your bill, and if the value is £18,000 or less, it may remove it altogether. The rateable value is shown on the Valuation Office Agency's online listing and on your rates bill.

Holiday and leisure businesses should confirm whether their property is treated as RHL by the council. Serviced accommodation, attractions and leisure venues can fall inside the definition, but the classification is a matter for the billing authority and depends on how the property is used, so it is worth asking rather than assuming.

Illustrative example. A café in a Devon market town has a rateable value of £16,000 on the 2026 list. Under the current rules it is above the £15,000 tapered relief limit and receives no SBRR. From 1 April 2027, provided it qualifies as an RHL property and meets the usual SBRR conditions, it falls below the new £18,000 threshold for full relief and its business rates bill drops to zero. The figures are hypothetical and for illustration only.

The CPI cap for bigger RHL properties

For RHL properties that still pay, the Budget limits how fast bills can rise. "Business rates bill increases for qualifying RHL properties in England are capped by CPI inflation in 2027-28 and 2028-29" (Budget 2026, para 6.191). The cap does not cover increases caused by improvements to the property, or the loss of other reliefs such as improvement relief or hardship relief after 1 April 2026.

The Treasury's averages give a sense of scale: "over 14,000 restaurants will avoid an extra £7,500 paid over the two years and 120,000 shops will avoid an extra £3,250 paid over the two years" (Budget 2026, para 3.22). Its summary line is that from April 2027 RHL businesses "will see their business rates either frozen in real terms, reduced, or cut to zero" (Budget 2026, para 3.3).

Pubs get a separate boost

Devon's pubs get a further measure. Relief for pubs, social clubs and live music venues in England rises "by 20ppt, from 15% to 35% from 1 April 2027", except for venues with a rateable value of £1 million or more (Budget 2026, para 6.189). The Treasury puts the average saving at "over £3,000 per pub next year" (Budget 2026, para 3.21). Combined with the higher SBRR thresholds, some smaller village and town pubs may pay nothing at all.

Other rates changes worth knowing

• Supporting Small Business extension. Ratepayers who received the 2023 Supporting Small Business scheme get a further year of protection from 1 April 2027. The Treasury says around 37,000 ratepayers keep protection worth an average of £3,000 (Budget 2026, paras 3.22 and 6.192).
• The 1p supplement continues. A 1p Transitional Relief Supplement is extended for two years from 1 April 2027. It is paid by ratepayers whose bills fell or rose only slightly at the 2026 revaluation, and helps fund the real-terms freeze (Budget 2026, paras 3.24 and 6.193).
• Appeals are cheaper. The £150 and £300 Valuation Tribunal fees for rating appeals in England are being abolished, with fees already paid on 2026 list appeals refunded (Budget 2026, para 6.194).
• Exclusions. From April 2027 vape shops lose access to the RHL multipliers and SBRR, and Adult Gaming Centres lose the RHL multipliers (Budget 2026, para 6.195).

What it does to running costs, and the case for buying

Business rates sit alongside rent, wages and energy as one of the fixed costs a small Devon business carries every month. When that line falls or disappears, the money has to go somewhere, and for a business that rents its premises there are two realistic outcomes over time.

The first is that the business keeps the saving and its profit improves. The second is that some of it is absorbed at the next rent review, because a unit with no rates bill is more attractive and landlords know it. Neither is certain, but the second is a real risk on shorter leases.

Owning the premises removes that second risk. A business that buys its building through an owner-occupier commercial mortgage replaces rent with loan repayments, builds equity in the property, and keeps the full benefit of any rates saving. Lenders assess owner-occupier lending on the business's own trading, typically looking at EBITDA cover over the mortgage repayments. A lower fixed cost base improves that cover, which can make a purchase easier to fund.

There is a wider cost picture too. The National Living Wage rises by 3.9% to £13.21 an hour on 1 April 2027 (Budget 2026, para 6.128), the same day the rates changes begin. For a café or shop with a handful of staff, the rates saving may offset part of the higher wage bill. When building a purchase plan, model both changes together rather than counting the rates saving on its own.

What to do now

1. Look up your rateable value on the 2026 list and check whether your property is classed as retail, hospitality or leisure.
2. Work out which band you fall into from April 2027: full relief up to £18,000, tapered relief to £21,000, or the CPI cap above that.
3. Ask the council whether you meet the wider SBRR conditions, particularly if you occupy more than one property.
4. Consider an appeal if you think your 2026 valuation is wrong. With Tribunal fees abolished, the cost of challenging a valuation is lower.
5. Check your lease. Note when the next rent review or lease end falls, and what the landlord can do at that point.
6. If buying is on the table, get your accounts in order. Two to three years of filed accounts plus current management figures, showing the business covers the mortgage repayments, is what an owner-occupier lender will want to see.

Devolution and visitor levies on the horizon

Two wider changes are worth watching for Devon's visitor economy. Devon, Plymouth and Torbay is one of ten new devolution agreements in their final stages (Budget 2026, para 4.67). Separately, the government plans to legislate so that all Strategic Authorities can introduce an Overnight Visitor Levy, with local leaders able to set out revenue plans "by March 2028" (Budget 2026, paras 4.60 and 6.40). Nothing has been decided for Devon, but hotels, guest houses and holiday accommodation owners should follow it.

Key dates

• 28 October 2026: Budget 2026 published
• 1 April 2027: SBRR thresholds for RHL properties rise to £18,000 and £21,000; pub relief rises to 35%; CPI cap on RHL bills begins; National Living Wage rises to £13.21
• 2027-28 and 2028-29: two years of CPI-capped RHL bill increases
• By March 2028: local leaders can set out visitor levy revenue plans
• 2029: next business rates revaluation, when thresholds will be reviewed

Brought to you by Business Mortgages Broker

Business Mortgages Broker arranges owner-occupier business mortgages for UK trading companies that want to buy, own or refinance their premises. Founder Matt Lenzie has 25 years in financial services, raising debt and equity, and has arranged around £400m of property finance. For Devon shops, cafés, pubs and holiday businesses thinking about owning their building, see business mortgages in Devon.

Source: HM Treasury, Budget 2026 (HC 726), 28 October 2026.

This article is general information only and is not tax or financial advice.