BPF Budget Analysis: Autumn 2025

From 1 April 2026, business rates bills in England will be updated to reflect changes in property values since the last revaluation in 2023. As a result of the revaluation, the small business multiplier will decrease from 49.9p in 2025-26 to 43.2p in 2026-27, and the standard multiplier will decrease from 55.5p to 48p. A package worth £4.3 billion over the next three years will support businesses as they transition to their new bills.

The government will also introduce new permanently lower retail, hospitality and leisure multipliers, to deliver the manifesto commitment to rebalance the business rates system and support the high street. English local authorities will be fully compensated for the loss of income as a result of these business rates measures and will receive new burdens funding for administrative and IT costs.

4.27 Business Rates Transitional Relief: To support ratepayers facing large bill increases at the revaluation the government is introducing a redesigned Transitional Relief scheme worth £3.2 billion over the next three years, providing more generous support for those paying higher tax rates. The Transitional Relief caps will be as follows for properties with a rateable value of:

• Up to £20,000 (£28,000 in London): in 2026-27 – 5%, in 2027-28 – 10% (plus inflation), in 2028-29 – 25% (plus inflation).

• £20,001 (£28,001 in London) to £100,000: in 2026-27 – 15%, in 2027-28 – 25% (plus inflation), in 2028-29 – 40% (plus inflation).

• Over £100,000: in 2026-27 – 30%, in 2027-28 – 25% (plus inflation), in 2028-29 – 25% (plus inflation). Note: These caps are applied before changes in other reliefs and local supplements.

4.28 Business Rates Transitional Relief Supplement: The government is introducing a 1p supplement to the relevant tax rate for ratepayers who do not receive Transitional Relief or the Supporting Small Business scheme to partially fund Transitional Relief. This will apply for one year from 1 April 2026.

4.32 Business rates retail, hospitality and leisure multipliers: From 1 April 2026, the government is introducing two permanently lower business rates multipliers for eligible RHL properties with rateable values below £500,000. These rates will be 5p lower than the national multipliers, making the small business RHL multiplier 38.2p in 2026-27 and the standard RHL multiplier 43p in 2026-27.

4.33 Business rates high value multiplier: From 1 April 2026, the government is introducing a high-value business rates multiplier for properties with rateable values of £500,000 and above 2.8p above the national standard multiplier, making the high-value multiplier 50.8p in 2026-27.

BPF response

The Government announced their intention to introduce new permanently lower tax rates for RHL at the 2024 Autumn Budget - to be funded by a new higher rate multiplier on properties valued over £500k RV.  We think this policy risks undermining growth and investment, especially in key growth sectors, while adding yet more complexity and cliff edges to the business rates system. We urge Government to commit to a comprehensive impact assessment of this policy to understand the effect on the wider economy, particularly investment and jobs.

The reduction in multipliers arising from the 2026 revaluation masks what could in reality be a significant increase in the tax burden on commercial property. The OBR forecasts that the business rates tax burden will go up by 5% in 2025/26 and 10% the following year. This is due to a combination of the revaluation, inflation, and the new tax revenues generated by the higher rate multipliers.

It is at least positive that the Government have recognised the need for a significant transitional relief – albeit this wouldn't be required with a more proportionate tax burden and more frequent revaluations.

4.36 Call for Evidence: Business rates and investment: The government is publishing a Call for Evidence at Budget on the role business rates play in investment. It also seeks feedback on the impact of the Receipts and Expenditure valuation method on investment.

BPF response

A proper examination of the impact of business rates on investment is long overdue and we welcome the publication of this Call for Evidence. It builds on the findings of previous consultations and is relatively broad, covering among other things a possible move from a “slab” to a “slice” system, the impact of Improvement Relief, and Empty Property Relief. 

4.170 Landfill Tax Rates 2026-27: The government will increase the standard rate of Landfill Tax by RPI and the lower rate by the cash amount of the increase in the standard rate, maintaining the differential between the two rates in cash terms.

4.171 Response to the consultation on reforms to Landfill Tax: The government will not proceed with transitioning to a single rate of tax by 2030 and will retain the exemption for quarries with disposal permits. The government has published a summary of responses that sets out its decisions on all the proposals included in the consultation.

BPF response

We had raised concerns in relation to the impact of proposed increases in the landfill tax rates on development viability, which is already acutely constrained. It is positive that Government have taken on board these concerns – and indeed gone further to provide grants to public bodies where landfill tax costs are an unaffordable blocker to development.

4.223 Qualifying Asset Holding Companies: The government will work with industry stakeholders over the coming months to explore targeted legislative changes aimed at ensuring the QAHC regime continues to operate effectively. Any legislative changes will be introduced in a future Finance Bill.

BPF response

The Qualifying Asset Holding Company Regime needs to continue to operate effectively so as to bolster the UK’s attractiveness as a location for asset management. We’ll look forward to engaging on improvements to the legislation.

4.217 Out-of-time claims to relief: The ATED legislation will be updated to reflect the policy intent that relief from ATED is available to companies holding property for qualifying commercial purposes. This includes relief claims within late ATED returns, which remain subject to robust late filing penalties.

BPF response

It is important that those companies holding property for qualifying commercial purposes are able to claim the relief they are entitled to – to that end this legislation seems sensible.

4.220 Stamp Duty Land Tax relief: The government will amend Stamp Duty Land Tax rules, so property transferred within Local Government Pension Schemes are subject to an SDLT relief. This will be legislated in Finance Bill 2026-27.

BPF response

Reducing the burden of SDLT for LGPS is a positive step for these significant investors in property - and will support the Government’s ambitions to create pension “mega-funds” without sacrificing the value of the schemes’ assets. It’s important the new legislation does not restrict commercial choice in terms of whether the LGPS property is invested in directly or indirectly, via an investment fund vehicle.

4.130 CIS: The government will strengthen HM Revenue and Customs (HMRC) powers to tackle fraud within the Construction Industry Scheme. The government is also announcing regulations, for technical consultation, aimed at simplifying and improving the administration of the scheme. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2026.

BPF response

We have long advocated for simplification and improvements to the administration of the CIS scheme – especially for property investors, where the cost of administration typically far outweighs any tax at stake. We look forward to engaging on these new regulations.

4.156 Enhancing tax transparency on real estate: The UK intends to participate in a new international agreement which will tackle tax evasion by providing for the automatic exchange of readily available information on real estate from 2029 or 2030.

BPF response

We support efforts to increase transparency of relevant details of real estate ownership and transactions to improve the image of the industry. However, any new regimes should be proportionate and avoid unduly increasing administrative and reporting burdens.

BPF response

Despite the Government’s pledge to deliver 1.5 million homes this Parliament, and amid the lowest housing starts and completions since 2020, it is disappointing that the Budget offers no additional support for residential investment or development. By excluding measures such as SDLT, council tax, and VAT relief - which we proposed in our Budget submissions - the Government has missed a key opportunity to address the viability crisis and boost delivery of much-needed housing. We will continue to advocate for these policies to be introduced to support the sector. 

3.28 Social Rent Convergence: To support additional investment in new and existing social housing, the government consulted on how to implement Social Rent convergence over the summer. Convergence would allow rents for Social Rent properties that are currently below ‘formula rent’ to increase by an additional amount each year, over and above the CPI+1% limit, until they ‘converge’ with formula rent.

While the government remains committed to implementing Social Rent convergence, it is important to take the time to get the precise details right, taking account of the benefits to the supply and quality of social and affordable housing, the impact on rent payers and affordability. The government will respond to the consultation in full, and announce a decision about how Social Rent convergence will be implemented in January 2026, before the launch of the SAHP.

The government also remains committed to the 10-year rent settlement for 2026-36 announced at SR25, which will permit social housing rents to increase by CPI+1% per annum.

BPF response

The Government had previously indicated that it would confirm the rate of social rent convergence in this Budget. This delay is disappointing, as it prevents Registered Providers from accurately forecasting their incomes until just a month before bids for the Social Affordable Homes Programme open. As detailed in our consultation response, we urge the Government to implement the higher limit of £2 per week to unlock great funding in the sector.

4.114 Changes to tax on property income: The government will create separate tax rates for property income. From 2027-28, the property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These rates will apply across England, Wales and Northern Ireland. The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2027.

BPF response

While we recognise the Government’s aim to align income rate supplements on property with other forms of investment income, further disincentives for Buy to Let investors will worsen the loss of rented homes identified in our Beyond Buy to Let report, adding pressure to an already strained Private Rented Sector. Any measures that push individual landlords out of the market must come alongside support for Build to Rent development, which will be essential in boosting rental supply. As noted above, this Budget has missed the opportunity to provide that support.

4.121 High Value Council Tax Surcharge: The government will introduce the High Value Council Tax Surcharge a new charge on owners of residential property in England worth £2 million or more, starting in 2028-29. Local authorities will collect this revenue on behalf of central government. Revenue will be used to support funding for local government services, with further detail to be set out at the next spending review. The government will consult on implementation of HVCTS in the new year.

BPF response

This was relatively well trailed in the weeks before the budget. It is sensible to seek to make the council tax system more progressive. It is disappointing that this policy change hasn’t been considered more holistically with other council tax reforms - for example, removing council tax on new developments could have supported development viability of high-density housing developments, that are rolled out at pace, like Build-to-Rent.

4.183 VAT treatment of land intended for social housing: The government will shortly consult on the reform of VAT rules to incentivise the development of land intended for social housing.

BPF response

We suspect this somewhat cryptic announcement could be to do with bringing forward the point at which sales of homes under construction can be sold to Registered Providers at zero-rate VAT. If so, it’s something to welcome although we need more clarity on HMRC’s interpretation of “golden brick” more generally and not just in the context of social housing.

4.69 Planning capacity and capability: The government will provide the Ministry for Housing, Communities and Local Government (MHCLG), the Department for Science, Innovation and Technology (DSIT) and Defra £48 million over the next three years to boost capacity and capability in the planning system.

BPF response

Any further investment into boosting local authority planning resources is to be welcomed by the development sector. However, this announcement falls short of the 3,000 additional planners over this parliament called for by the BPF in our Plan for Growth.

It will be important that any extra resource is deployed strategically so that all parts of our planning system are firing on all cylinders to get development moving again. We would also welcome more information on the new Planning Careers Hub and the expansion of the Pathways to Planning Graduate Scheme.

More broadly, resourcing across wider regulators is equally important, including relevant statutory consultees consulted on certain planning applications, and the Building Safety Regulator, where delays at Gateway processes have been bringing urban development to a standstill across our towns and cities.

4.95 Neighbourhood Health Centres: The government is announcing plans for delivery of 250 new Neighbourhood Health Centres, of which 120 will be operational by 2030. These will be delivered through the NHS Neighbourhood Rebuild Programme through a combination of public sector investment and a new model of Public-Private Partnership. To ensure transparency and fiscal sustainability, these projects will be budgeted for as if they are on balance sheet.

BPF response

We welcome the commitment to the delivery of new Neighbourhood Health Centres through partnership with the private sector. We look forward to seeing further detail on the new model of Public-Private Partnership that will be used, and which must provide sufficient flexibility to support a variety of development and partnership models.

4.74 Mayoral Revolving Growth Fund: The government will provide a share of the £500 million Mayoral Revolving Growth Fund to the Mayoral Strategic Authorities of Greater Manchester, West Midlands, Liverpool City Region, North East, West Yorkshire and South Yorkshire. The Mayoral Revolving Growth Fund is a strategic investment partnership which will see central government and Mayors sharing risk to overcome access to finance barriers in key city regions, accelerating investment, unlocking development and boosting growth.

4.75 The government will launch the Local Growth Fund for the Mayoral Strategic Authorities of Greater Manchester, North East, West Midlands, South Yorkshire, West Yorkshire, Liverpool City Region, Greater Lincolnshire, Tees Valley, Hull & East Yorkshire, York & North Yorkshire and East Midlands. These strategic authorities will each receive a share of the £902 million over four years to invest in growth-driving interventions, including local infrastructure, business, and employment support and skills programmes.

BPF response

The BPF strongly supports greater devolution of budgets and investment powers to Strategic Authorities and while it would always be good to see more money being made available, it’s positive to see funds starting to flow from central to regional government in a more consistent, structured and long-term way.

4.3 Energy Company Obligation, Renewables Obligation and Warm Homes Plan: The government is not continuing the funding of the Energy Company Obligation on bills after March 2026 and is announcing £1.5billion of new funding to support households facing fuel poverty. The government will also fund 75% of the cost of the Renewables Obligation to households in 2026-27, 2027- 28 and 2028-29.

2.6 The government is committed to doing more to reduce electricity costs for all households and improve the price of electricity relative to gas. The government will consider how to further target the savings announced in the Budget at electricity bills, including the savings derived from ending the Energy Company Obligation scheme. The government will set out how it intends to deliver this through the Warm Homes Plan.

BPF response

This is a step in the right direction and reflects a long-standing policy ask of the BPF. Removing some policy costs from electricity bills not only makes electricity cheaper relative to gas but supports the electrification of homes and buildings by encouraging the adoption of electric heating.

3.20 Environmental regulation: The government is committed to delivering the most ambitious planning reforms in a generation, principally through the flagship Planning and Infrastructure Bill – which sets the foundations to unlock new housing and critical infrastructure delivery – set to become law imminently.

3.21 Secondary legislation and guidance to support full implementation will follow including to make pre-application engagement for major infrastructure projects more targeted and proportionate… The government is also taking a more strategic approach to manage the impact of development on the environment, with Environmental Delivery Plans set to drive pro-growth interventions that provide better benefits for nature than the status quo.

3.25 The government is also investing £48million of additional funding to boost capacity in the planning system… The government is also funding improvements to the performance and speed of environmental regulators, with extra resources for priority projects and delivery of the Nature Restoration Fund’s Environmental Delivery Plans.”

BPF response

We support measures to improve the development process but want to see the detail of how the new Environmental Delivery Plans will work in practice. We are looking for reassurance that the new approach will simplify and speed up the process for developers whilst genuinely protecting and restoring nature.

We have previously raised concerns about capacity and capability in environmental regulators, and welcome additional funding.

3.60 The Electricity Grid: Connections to the grid remain one of the biggest blockers in delivering key growth projects across the economy. The government, alongside NESO and Ofgem, is therefore going further to overhaul connection processes by: applying new powers being sought in the Planning and Infrastructure Bill to create mechanisms to reallocate released capacity and reserve future capacity for strategically important demand projects; working with Ofgem to explore enhanced entry and membership requirements to ensure viable projects progress in the demand queue; reducing the time to power by exploring self-build for high voltage grid infrastructure and more flexible connections where possible; and removing speculative demand in the grid connection queue.

BPF response

The lack of grid capacity is a major barrier to development. BPF members and others have reported that delays in securing connections to the electricity grid impact development and threaten the viability of individual projects. With demand on the grid expected to double by 2050, the challenges around grid capacity are becoming more acute.

We support the Government’s reforms in this area but want them to go further and faster. We also want to make sure that the impact of grid constraints on real estate development is understood by policy makers and that the planned reforms work for real estate developers as well as for developers of other types of infrastructure projects.