The government has published draft legislation outlining a ‘permanent’ cut in business rates for retail, hospitality and leisure (RHL) properties from 2026, including pharmacies.

The tax cut will be funded by a tax rise for the very largest business properties, such as online sales warehouses.

Until then, 250,000 RHL properties will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system.

The recent Budget also announced a freeze to the small business multiplier, along with small business rates relief. The government claims that, taken together, the measures are worth over £1.6bn in 2025-26.

Chief secretary to the Treasury, Darren Jones, this week said: ‘We are creating a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century.

‘To deliver our manifesto pledge, from 2026-27, we intend to introduce permanently lower tax rates for retail, hospitality, and leisure properties, including pharmacies, from 2026-27.

‘This permanent tax cut will ensure that they benefit from much-needed certainty and support.’

Independent Pharmacies Association (IPA) chief executive Dr Leyla Hannbeck commented: ‘The government needs to do so much more to support our struggling sector.

‘However, I’m delighted that as the sole representative of the sector on the High Street Task Force we’ve played a major part in persuading the government to at least keep a significant part of the current business rates relief and legislate for it to be enshrined in law.’

James Murray, exchequer secretary to the Treasury, said the bill draft was a ‘a major step’ towards the new system that will ‘support retail, hospitality and leisure businesses on our high streets to succeed’.

He added: ‘For too long the business rates system has been working against our high streets.

‘This bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.’

Sebastian James, former chief executive of Boots, said: ‘It is very welcome to see the government take steps to rebalance the heavy business rates load on bricks and mortar retail and hospitality as businesses, both large and small, in this vital sector seek to mitigate cost pressures in order that our high streets up and down the country can flourish as the centres of their communities.’

The Autumn Budget also saw the announcement of increased employers’ National Insurance Contributions (NIC) and National Living Wage (NLW) – which the IPA estimated would cost an average community pharmacy premises more than £12,000 each year.