Spring Budget 2025: Business Rates Shake-Up and What Working Voids Look Like

The Spring 2025 fiscal context brought a series of measures and updates that significantly affect business rates and how commercial properties are occupied. In an economic climate where many high streets and office blocks are struggling with vacancies, the Chancellor’s announcements put a spotlight on non-domestic rates, relief schemes and empty property taxation.

This post breaks down the key budget changes affecting commercial landlords and occupiers, from updated reliefs to tougher empty property rules, and explains what genuine commercial use of vacant units looks like in this evolving landscape. Property owners, landlords, commercial agents and facilities managers will find a clear analysis of the Spring fiscal measures and what they mean for managing business rates liabilities in 2025.

Key business rates changes in Spring 2025

The Spring 2025 fiscal context continues the government’s commitment to reforming the business rates system. While major structural reforms are still on the horizon, several immediate changes and confirmations affect how much business rate taxpayers owe and what reliefs they can claim:

• Retail, Hospitality and Leisure (RHL) Relief tapered: The budget confirms that the temporary RHL Relief, introduced to support high street businesses in recent years, will continue into 2025/26 but at a reduced level. Eligible occupied retail, hospitality and leisure properties will receive 40% off their business rates bills (up to a £110,000 cap) for 2025/26 (Business rates reform: Autumn Budget 2024 | Tax Adviser) (Business Rates Relief: 2025/26 Retail, Hospitality and Leisure Scheme - GOV.UK). This is a drop from the 75% relief available in 2024/25 (Business Rates Relief: 2024/25 Retail, Hospitality and Leisure Scheme - GOV.UK), indicating that government support for these sectors is tapering down as the economy normalises. RHL businesses therefore need to budget for a larger rates bill (60% of the normal charge, versus only 25% last year).

• Multiplier freeze for small businesses: To further support smaller properties and the high street, the Chancellor has frozen the small business rates multiplier for 2025/26 (Autumn Budget 2024: Business Rates | Mills & Reeve). Freezing the multiplier helps limit increases in bills that would otherwise occur due to inflation. (It is worth noting that larger properties above certain rateable values may not enjoy this freeze and could even see higher multipliers in future as part of a rebalancing.)

• Future reforms on the horizon: Importantly, the Spring Statement reiterated a commitment to overhaul the business rates system to better support the high street and drive investment (Spring Statement 2025: On-the-day factual briefing | Local Government Association). An interim report on business rates reform is expected in summer 2025, with more detailed policy changes to be unveiled by the Autumn Budget 2025 (Spring Statement 2025: On-the-day factual briefing | Local Government Association). Among the ideas being discussed are permanently lower tax rates for smaller businesses and high-street properties, funded by higher rates for large “online” warehouses, as well as more frequent property revaluations and digitalising the system (Business rates reform: Autumn Budget 2024 | Tax Adviser). While these longer-term reforms will not kick in immediately, the direction of travel is clear: the system is aiming to become fairer and more responsive, albeit within the constraint that it must still raise the same revenue overall (Business rates reform: Autumn Budget 2024 | Tax Adviser). For now, though, property owners must navigate the current rules, including some recent changes that have already come into effect from last year’s budget.

The 92-day occupation rule for empty properties

Perhaps the most significant change affecting commercial landlords is the new empty property rates rule that took effect from 1 April 2024 (as a result of last year’s Spring Budget) and continues to shape 2025. Business premises must now be re-occupied for at least 13 weeks (around 92 days) in order to qualify for a fresh period of empty property rates relief (Spring Budget analysis: changes to Empty Property Relief will put further financial pressure on landlords | Real Estate Law Blog | Kingsley Napley). Previously, a short occupation of just 6 weeks was sufficient to reset the clock.

This rule matters because of how empty property rates relief works. When a commercial property becomes vacant, landlords are usually exempt from business rates for an initial period, generally 3 months for offices/shops and 6 months for industrial/warehouse properties (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). After that, full rates become payable even while the property lies empty. Under the old rules, if the landlord could secure any tenant or occupation for at least six weeks, that short occupation would “reset” the relief, effectively granting a further 3 or 6 month exemption once the property was empty again (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). Many landlords engaged in this practice of intermittent short lettings to continually refresh their relief.

The government saw this “6-week relief reset” tactic, often dubbed “box shifting”, as an abuse of the system and moved to clamp down on it (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). Companies would take short-term lets of vacant properties, sometimes just storing nominal items (hence “boxes”), to help the owner avoid empty rates (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). Now, however, the bar has been raised: an empty property must be occupied for at least 13 weeks before the owner can claim a new cycle of empty property relief (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). In other words, a landlord has to bear at least three months of rates payments (or have a tenant pay them) before earning another rates-free period. This 92-day occupation threshold aims to discourage repetitive short-term occupancy arrangements purely for tax purposes.

From a landlord's perspective, the old shortcut has gone. The traditional quick fix of a token 6-week tenancy to cut losses is no longer available. Intermittent occupation now requires a much longer commitment, which can be harder to arrange and may reduce the appeal of pop-up shops or short-term licences. Indeed, there are concerns in the retail sector that this change could deter landlords from offering space to pop-up operators (who typically want shorter stints), potentially removing the vibrancy these temporary shops bring (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). The intention was to curb avoidance, but it may also mean some space stays empty longer if landlords hold out for a tenant willing to take at least a 3-month lease.

Empty property taxation: pressure on landlords

By extending the required occupation period to 13 weeks, the government is effectively tightening what some call the “empty property tax.” Landlords already grappling with high vacancy rates now face the prospect of paying full business rates on empty properties for longer periods of time, unless they can secure qualifying occupiers. This change “will significantly add to the financial burden on landlords already facing a multitude of pressures,” as one real estate law analysis noted (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). Those pressures include an uncertain economic environment in which tenants are struggling: a planned increase in the business rates multiplier (linked to inflation) in April 2024 was forecast to push more tenants into insolvency, resulting in even more empty commercial properties (Spring Budget analysis: changes to Empty Property Relief | Kingsley Napley). In short, many landlords may find themselves with no tenant, no rental income, and now a hefty rates bill to pay with fewer ways to lighten the load.

It is not just retail high streets feeling the pinch. Office and industrial landlords too are seeing cost challenges. Business rates have become a significant problem alongside other costs for property owners and occupiers, contributing to older offices being closed or even demolished in some cases (Q4 2024 RICS UK Commercial Property Monitor). When properties go vacant, owners must quickly decide whether to shoulder the ongoing rates or seek some form of relief. With the new 92-day rule, some may attempt to avoid the tax by holding properties vacant longer (waiting for a suitable tenant) rather than engaging in short lettings that do not meet the threshold.

Claiming reliefs and navigating the new rules

Despite the challenges, the current policy landscape is not all doom and gloom. There are still opportunities to claim business rates reliefs and strategies to manage liabilities, if one is proactive and well-advised. The Spring 2025 fiscal context and recent reforms offer a mix of sticks and carrots for ratepayers:

• Take advantage of available relief schemes: Make sure you are claiming all eligible reliefs. For example, small properties might qualify for Small Business Rate Relief, which can reduce or eliminate the rates bill if the rateable value is below certain thresholds. Likewise, if your property is in retail, hospitality or leisure use, claim the 40% RHL Relief for 2025/26 (Business rates reform: Autumn Budget 2024 | Tax Adviser). It is automatically applied by councils but ensure it is reflected in your bill. There is also an Improvement Relief in place (introduced in 2023) which means if you have made qualifying improvements to your property, the resultant increase in rateable value can be ignored for up to 12 months. And if your property is listed or in a specific Enterprise Zone, additional reliefs or exemptions might apply. Our empty property rates page can help you understand your exposure on void units.

• Plan vacant periods carefully: With the 13-week occupation rule now in force, property owners need to think carefully about how they handle vacancies. If a property might be empty for an extended period, consider arranging a genuine commercial use that lasts at least 3 months. This could be through a flexible lease or licence to a business that needs temporary space, or through live commercial services such as guest Wi-Fi, local advertising and remote monitoring. The key is that any interim use must be substantive and sustained, not a token arrangement. The days of shuffling empty boxes in a warehouse for six weeks are over.

• Monitor revaluations and appeals: Business property values were revalued in 2023, and the next revaluation is slated for 2026 under the new three-year cycle. However, the government signalled it may increase the frequency of revaluations, possibly moving to annual revaluations in the future to keep rates more aligned with current market conditions (Business rates reform: Autumn Budget 2024 | Tax Adviser). Stay on top of your properties’ rateable values. If you believe a valuation is too high, consider lodging a challenge through the “Check, Challenge, Appeal” system.

• Prepare for compliance changes: The government is looking at modernising rates administration by 2028, including a potential “duty to notify” system requiring ratepayers to report changes (like occupancy status) more promptly (Business rates reform: Autumn Budget 2024 | Tax Adviser). This goes hand-in-hand with possible anti-avoidance measures such as a General Anti-Avoidance Rule for business rates (Autumn Budget 2024: Business Rates | Mills & Reeve). Landlords and agents should be prepared for closer scrutiny of relief claims and occupancy patterns. Everything should be above board and well documented.

In summary, property owners can still manage their business rates burden by being proactive: claiming the reliefs they are entitled to, structuring genuine uses carefully, and complying with the new rules. It has become a more complex playing field, which is why understanding your exposure matters.

What working voids look like in practice

With the Spring 2025 fiscal context reinforcing these changes, the question for landlords holding vacant stock is what genuine commercial use of a void unit looks like under the 92-day rule.

The answer is not a rates workaround. It is a live service that runs inside the building while you search for a permanent tenant. VacatAd provides three:

• Connect: guest Wi-Fi with real session data, giving the public free connectivity and demonstrating continuous activity in the unit.
• Advertise: window and portal advertising for local businesses, keeping frontages active and visible on the high street.
• Protect: remote monitoring that alerts owners to security, environmental or maintenance issues on vacant property.

These are commercial services in their own right. The installation is plug-and-play, requires no structural alterations, and generates independently verifiable evidence of use: Wi-Fi logs, advertising impressions, monitoring alerts. That is substantively different from placing boxes in a warehouse and hoping the council does not ask questions.

Where the occupation is genuine and properly documented, business rates liability may change as a possible secondary outcome. We do not guarantee any specific rates result. Outcomes vary by property, local authority and circumstances. VacatAd is a void-management service first; any rates impact follows from that genuine use, not the other way around.

Every month that a commercial unit lies empty is a hit to your bottom line. With longer mandatory occupation periods, the cost of doing nothing has risen. A working void with live services keeps the unit active, monitored and contributing to the local area while you market it for a longer-term let.

Conclusion

The Spring 2025 fiscal context has brought significant changes to business rates that property stakeholders cannot afford to ignore. From scaled-back reliefs for high street businesses to tougher rules on empty property exemptions, the cost of holding commercial property is set to rise for many. Landlords and occupiers must respond by staying informed and thinking carefully about what genuine use of vacant space looks like.

The Spring announcements were the beginning of a fundamental restructuring. The Autumn Budget 2025 delivered the most comprehensive business rates overhaul in over a decade, building on these foundations with confirmed multiplier changes and new relief structures.