Qualifying hotels below £500,000 in rateable value can access lower hospitality multipliers. But revaluation, reliefs and other adjustments determine what operators actually pay.
Hotel business rates in England changed on 1 April 2026, when new hospitality multipliers came into force alongside the revaluation of non-domestic properties.
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Qualifying hotels with a rateable value below £500,000 receive lower retail, hospitality and leisure (RHL) multipliers. Properties at or above that threshold fall under a high-value multiplier that applies across property types.
The rateable value and multiplier are only the starting point. Transitional Relief, Supporting Small Business Relief and a temporary 1p supplement can affect the final bill.
Which business-rates multiplier applies to a hotel?
For 2026–27, the headline multipliers for qualifying occupied hotels in England are:
| Property’s rateable value | Multiplier | 2026–27 rate |
| Below £51,000 | Small business RHL multiplier | 38.2p |
| £51,000 to below £500,000 | Standard RHL multiplier | 43.0p |
| £500,000 or more | High-value multiplier | 50.8p |
The two RHL multipliers are 5p below the corresponding national multipliers. The high-value multiplier is 2.8p above the standard national multiplier and applies to properties with rateable values of £500,000 or more, regardless of their use.
The bands are based on rateable value, rather than bedroom numbers, turnover or the hotel’s sale price.
Which hotels qualify for the lower hospitality multiplier?
Hotels are explicitly included in the government’s definition of qualifying RHL properties. The rules also cover boarding and guest houses, B&Bs, qualifying holiday homes and certain short-term accommodation.
The property must be occupied and wholly or mainly used for a qualifying purpose. Hotel, boarding-house or guest-house use by members of the public qualifies, provided no significant element of nursing care is supplied.
Local authorities determine eligibility under the statutory definition. Previous receipt of discretionary RHL relief does not automatically guarantee entitlement to the lower multiplier.
For mixed-use premises, operators should check the relevant hereditament – the property assessed as a single unit for business rates – and its main use.
How are hotel business rates calculated?
The starting calculation is:
Rateable value × applicable business-rates multiplier
A multiplier of 43p means £0.43 is applied for every £1 of rateable value.
A qualifying hotel with a rateable value of £300,000 therefore has a headline calculation of £129,000. A hotel valued at £600,000 falls within the 50.8p high-value band, producing £304,800.
These figures exclude reliefs, supplements and other adjustments. They are not necessarily the amounts payable.
A hotel’s rateable value is not its business-rates bill. The Valuation Office Agency determines the assessment, while the local authority calculates and collects the charge.
What changed when the old RHL relief ended?
The new multipliers replaced the temporary RHL relief available during 2025–26, when eligible businesses received a 40% discount subject to a £110,000 cash cap per business.
The replacement provides a lower multiplier for qualifying properties below £500,000. There is no equivalent cash cap, so each qualifying property within a hotel chain can benefit if it meets the eligibility conditions.
The government describes the RHL multiplier structure as permanent support. That does not mean the published annual rates are fixed indefinitely: finance teams should check the multipliers for each billing year.
When comparing costs, operators should use the amount payable after reliefs and adjustments in both years.
Why the 2026 revaluation matters
The rating list effective from 1 April 2026 uses a valuation date of 1 April 2024. The previous list, introduced in April 2023, used 1 April 2021.
The Valuation Office Agency says the pandemic-affected 2021 date resulted in substantially lower assessments for most hotels in the 2023 revaluation. Increases in the 2026 list reflect the subsequent recovery in hotel trading.
Operators therefore need to consider changes to both the rateable value and the multiplier. A lower hospitality multiplier may still produce a higher underlying liability if the assessment has risen significantly.
A valuation increase can also move a property into a different multiplier band, including the high-value category at £500,000.
How are hotels valued for business rates?
Rateable value estimates the annual rent a property could command at the specified valuation date.
The Valuation Office Agency normally uses rental comparisons for small independent hotels, including double-bed units when comparing similar properties.
Large independent and chain hotels are valued using fair maintainable trade (FMT): the annual trade expected from a reasonably efficient operator. A percentage is applied to derive the rateable value.
Location, hotel type, facilities, expected profitability and trading performance can influence the assessment. Understanding the valuation method can help operators examine the basis of their property’s assessment.
What relief can limit a higher bill?
Transitional Relief phases in qualifying increases following revaluation. For 2026–27, the percentage caps are:
| Rateable value | Transitional Relief increase cap |
| Up to £20,000, or £28,000 in London | 5% |
| Above £20,000, or £28,000 in London, and up to £100,000 | 15% |
| Above £100,000 | 30% |
These limits apply within the transitional calculation. Other reliefs and local supplements can affect the final bill, and different caps apply in later years. Councils adjust bills automatically where properties qualify.
Supporting Small Business Relief can also protect eligible businesses whose bills rise following revaluation and which lose specified reliefs, including RHL relief.
For 2026–27, the increase is capped at the higher of £800 or the applicable transitional percentage, not whichever is lower. The comparison takes account of the specified reliefs received in 2025–26.
What is the 1p business-rates supplement?
A temporary 1p Transitional Relief Supplement applies to relevant properties in 2026–27 to help fund transitional support.
Where payable, it is added to the applicable multiplier before reliefs. A qualifying hotel using the 43p standard RHL multiplier would therefore have a calculation based on 44p before other adjustments.
For a property valued at £300,000, that produces £132,000 rather than the £129,000 headline calculation.
Properties receiving Transitional Relief or Supporting Small Business Relief are protected from an additional supplement charge through those calculations. The supplement should therefore be considered alongside the relief entries on the bill. Some properties, including certain newly assessed premises, fall outside its scope.
The supplement applies for one year from 1 April 2026.
Hotel valuation methodology is under review
HM Treasury launched a call for evidence on pub and hotel valuation methodology on 24 August 2026 as part of an independent review led by rating specialist Jerry Schurder.
The review covers valuation methods used in England and Wales and examines whether current approaches remain appropriate, consistent and transparent.
It does not itself alter current assessments or multipliers. Its stated intention is for recommendations accepted by the government to take effect at the next revaluation.
What should hotel operators check?
Hotel owners and finance teams should review each property’s position using the following checks:
- Rateable value: Confirm the current assessment and understand how it was calculated.
- Multiplier and eligibility: Check the applicable band and whether the assessed property meets the statutory RHL definition.
- Reliefs: Verify any Transitional Relief or Supporting Small Business Relief.
- Supplement: Establish whether the temporary 1p supplement is payable and how it appears in the calculation.
- Portfolio exposure: Identify properties approaching the £51,000 and £500,000 thresholds.
- Budgeting: Compare bills after adjustments and forecast increases as temporary protection changes over the transitional period.
The billing authority is the first point of contact for questions about the bill, multiplier or reliefs. Queries about the underlying rateable value should be pursued through the Valuation Office Agency’s valuation account and checking process.
For hotel operators, the key point is that the new hospitality multipliers cannot be assessed in isolation. The 2026 business-rates position for each property depends on the interaction between its rateable value, the applicable multiplier and the reliefs or adjustments applied to the bill.
