Business Rates 2026: Protect Growth, Not Just Survival

5,500 UK small businesses don’t sign an open letter to the Chancellor for fun. They do it when cashflow is tight, certainty is disappearing, and one more fixed cost feels like it could tip the business from “hanging on” to “closing down”. That’s exactly what’s happening ahead of the April 2026 business rates changes.

If you’re a startup or scale-up in the UK—especially if you trade from a physical location, operate a hybrid model, or serve high-street customers—this isn’t just “tax news”. It’s a planning problem. And planning problems become marketing problems fast: when fixed costs rise, marketing is the first budget line people freeze, which then kills pipeline, which then creates a bigger cash problem.

This post sits in our Governance, Regulation & Public Trust series for a reason. Regulatory change doesn’t just change what you pay—it changes what you believe is safe to invest in. When public policy feels unpredictable, businesses stop taking bets. Your job, as a growth leader, is to keep investing—but to do it with sharper numbers, tighter positioning, and better downside protection.

What’s changing in April 2026—and why founders should care

The core issue is simple: business rates are a fixed cost, and fixed costs reduce strategic flexibility.

From 1 April 2026, England and Wales will implement updated rateable values (the assessed rental value of a property used to calculate business rates). Alongside the revaluation, a major relief is ending: the Retail, Hospitality and Leisure (RHL) Business Rates Relief, which provided 40% off bills in 2025/26, is due to stop.

The government has signalled it will adjust multipliers and introduce sector differences to create a “fairer” ongoing system. The catch, as many high-street operators are pointing out: a permanent “slightly lower” rate often doesn’t beat a large temporary relief.

Here’s the bit most founders miss:

• Revaluations don’t hit evenly. Two businesses with similar turnover can see very different bills depending on location and property values.
• Rates increases are not performance-based. They can rise even when footfall is down.
• Marketing gets squeezed first. When a fixed cost rises, variable spend (usually marketing) is the pressure valve.

If you’re modelling 2026 growth and you haven’t stress-tested business rates, you’re guessing.

Why 5,500 businesses speaking up is really a trust signal

The open letter to Rachel Reeves, organised by Rupert Lowe MP and signed by pub landlords, café owners, shopkeepers and other local employers, is blunt: businesses say they’ve already taken a decade of hits—rent, energy, insurance, inflation, staffing pressures, Covid debt—and now face a revaluation that could be “the final straw.”

Whether you agree with the politics or not, the business message matters:

“Business rates are a fixed cost we can’t avoid… We trade from real premises, on real high streets, serving real communities.”

From a Governance, Regulation & Public Trust lens, this is bigger than rates. It’s about whether businesses believe government will mitigate predictable damage when policy shifts.

When trust drops, three things happen inside companies:

1. Planning horizons shorten (90-day thinking replaces 12-month strategy).
2. Investment becomes defensive (brand building gets cut; promotions increase).
3. Risk moves downstream (suppliers and staff absorb pressure via delays, reduced hours, or churn).

You can’t control the policy outcome, but you can control how your growth plan reacts to uncertainty.

The growth risk: when fixed costs rise, your CAC tolerance collapses

A rates increase doesn’t just reduce profit. It changes the type of marketing you can afford.

Marketing decisions are often framed as “spend more, grow faster.” The reality is: you’re always balancing cash conversion cycle, gross margin, and customer acquisition cost (CAC). When rates go up, your monthly break-even rises, and suddenly:

• you can’t tolerate long payback periods,
• you avoid experiments,
• you stop funding top-of-funnel,
• you lean too hard on short-term performance channels.

That shift is dangerous because short-term channels are rarely enough on their own—especially in 2026, when many categories are crowded and CPCs remain structurally high.

A practical example founders can model in an hour

Let’s say your business faces an additional £800/month in business rates from April.

If your average contribution margin per new customer is £120, you now need roughly:

• 7 additional customers/month just to stand still (£800 / £120 ≈ 6.7).

If your blended CAC is £90, that implies:

• 7 customers × £90 = £630 extra marketing spend, plus the £800 rates increase.

So the “£800/month rates issue” quickly becomes a £1,430/month growth gap if you intend to maintain profit and trajectory.

That’s why this story belongs in a startup marketing strategy conversation, not only a finance one.

What to do now: a 2026-ready playbook for startups and scale-ups

The right response isn’t panic and slashing spend. It’s replacing hope with systems.

1) Build a business rates scenario into your growth plan

Answer first: you need three versions of your 2026 plan—base, downside, and ugly.

Create a simple scenario table:

• Base case: no major rates change (or small increase)
• Downside: +10–20% total occupancy cost increase (rates + service charge + insurance)
• Ugly: +30% occupancy cost increase plus flat revenue for 2–3 months

For each scenario, define:

• maximum monthly marketing spend,
• minimum pipeline required,
• which campaigns pause first (and which never pause).

Most companies get this wrong by pausing the campaigns that build demand and keeping the ones that harvest it. That feels “safe” but often creates a Q3/Q4 pipeline crash.

2) Reposition around “local value” and community outcomes

Answer first: if rates punish physical presence, make your physical presence a brand asset.

High-street and place-based businesses have an underused advantage: they can credibly talk about community impact. That’s not fluff—it’s positioning.

Actions that work:

• Publish a “what your spend supports” message (jobs, apprenticeships, local suppliers).
• Partner with neighbouring businesses on joint offers (shared audience, shared costs).
• Make reviews, UGC, and local press a deliberate acquisition channel.

This matters because regulators respond to public pressure, and public pressure forms around stories. If your brand story is only “we sell X,” you’re invisible in policy debates.

3) Treat marketing like an asset allocation problem, not a monthly expense

Answer first: split marketing into ‘always-on’ and ‘experiment’ budgets—then protect the always-on.

A simple rule I’ve found reliable:

• 60–80%: always-on demand capture (brand search, retargeting, conversion-rate improvements, email/SMS to existing customers)
• 20–40%: structured experiments (new creatives, new audiences, partnerships, SEO content)

When costs rise, don’t zero the experiments. Shrink them, but keep them alive. If you stop learning, you stop adapting.

4) Reduce exposure to location risk

Answer first: diversify your revenue streams so one property cost doesn’t dictate your entire plan.

Options to consider:

• subscriptions or memberships (predictable cash)
• B2B add-on lines (higher AOV, faster payback)
• events and workshops (especially for hospitality and lifestyle brands)
• “offline to online” offers (click-and-collect, local delivery, digital gift cards)

This isn’t about “moving online” completely. It’s about ensuring your growth engine isn’t hostage to a single fixed-cost base.

5) Use advocacy as a marketing channel—carefully

Answer first: public policy engagement can build trust, but only if it stays credible and practical.

If your business is impacted, consider:

• joining local business groups (BIDs, chambers)
• sharing real numbers (not outrage) in your comms
• writing to your MP with a one-page brief: projected impact on jobs, hours, prices

A strong stance beats vague commentary. The goal isn’t to “go viral”; it’s to be taken seriously.

People also ask: quick answers founders need

Will all businesses see higher business rates in 2026?

No. Revaluations create winners and losers depending on location, property values, and sector rules. The big risk is that the end of major relief schemes leaves some firms paying more overall.

Why are business rates such a pain compared with other taxes?

Because they’re not linked to profitability. They’re linked to property assessment. A bad trading year doesn’t automatically reduce your bill.

How should startups budget for business rates uncertainty?

Treat it like you’d treat FX risk: model scenarios, define triggers, and pre-decide what you’ll cut (and what you won’t).

Where this lands for public trust—and your 2026 pipeline

The open letter signed by 5,500 small businesses is a warning flare: UK firms are asking for regulatory clarity and mitigation before April 2026, not after closures begin. That’s a public trust issue. When policy is seen as disconnected from operational reality, compliance stays—but confidence disappears.

For startups and scale-ups, the most pragmatic move is to act as if fixed costs could rise and design your growth plan to survive that hit without switching off demand generation. Build scenario budgets. Tighten payback. Strengthen local positioning. Keep learning cycles running.

If April 2026 triggers another wave of high-street closures, the winners won’t be the brands with the loudest opinions. They’ll be the ones that planned early, communicated clearly, and kept the pipeline healthy while everyone else hit pause.

What would change in your growth strategy if you had to cover an extra £500–£1,500/month in fixed costs without sacrificing momentum?