The Government has revised its business-rates guidance to councils days after the Budget, handing high street firms £33 million more in discounts than they were first told. The correction, issued last weekend, followed the discovery that the original guidance had failed to take account of inflation.

Retail, hospitality and leisure (RHL) firms were initially due a 5p discount in the multiplier used to calculate their bills. But with bills set to rise in line with the 3.5% rate of inflation recorded in September, the value of that discount would have been eroded. Officials moved quickly to issue new guidance, raising the discount to 5.2p from next April so that it keeps pace with tax bills.

The change means the small business RHL multiplier will be 39.5p in the pound, down from the 39.7p first published, while the standard RHL multiplier falls from 44.7p to 44.5p. The figures were confirmed in an updated letter from the Ministry of Housing, Communities and Local Government (MHCLG) to council finance chiefs, which says the multipliers have been updated to ensure that inflation adjustments are consistently applied to the RHL multipliers to match the policy intention. Read the MHCLG letter on GOV.UK.

The letter sets out the full set of multipliers for 2027/28: a standard multiplier of 49.7p, a small business multiplier of 44.7p, a standard RHL multiplier of 44.5p, a small business RHL multiplier of 39.5p and a high-value multiplier of 52.5p. Business rates are calculated by multiplying a property's rateable value by the relevant multiplier, so even a fraction of a penny in the pound makes a real difference to a shop, pub or restaurant's annual bill.

The correction follows the Autumn Budget on 28 October, when the Chancellor announced a package of business-rates support for England. It included an extra 20% relief for pubs, social clubs and most live music venues, taking total relief to 35%; an increase in the small business rates relief threshold for RHL properties from £12,000 to £18,000, tapering to £21,000; and a two-year real-terms freeze on bills for RHL properties, pubs and live music venues until 31 March 2029. Vape shops and adult gaming centres lose access to the lower RHL multipliers under the same package.

The department told council officials that the revision ensures inflation adjustments are now applied consistently and reflects its policy intention. It did not clarify whether the original figures reflected a calculation error or an omission, and the department has been contacted for comment, the Press Association reported.

For high street businesses, the correction matters because the discount is now protected in real terms: without it, the 5p reduction would have shrunk as bills rose with inflation. Firms should still check their own bills against the updated multipliers when they take effect on 1 April 2027, as councils apply the rates from their own records of how each property is used.