Business rates shake-up ‘will cause job losses and closures’

A reduction in property tax relief will lead to further store closures and job losses for small retail, hospitality and leisure companies, industry leaders have warned.
In her first budget as chancellor, Rachel Reeves said she would replace the current 75 per cent discount to business rates payments, due to expire next April, with a discount of 40 per cent. The relief will continue to apply up to a maximum £110,000 per business, meaning two thirds of ratepayers in these sectors do not benefit from the relief.
Although businesses welcomed an extension to the relief scheme, which was introduced during the Covid-19 pandemic to protect shops, cafés and pubs, many bemoaned the reduction. It will result in an average 140 per cent rise — £688 million — in business rates bills for more than 250,000 high street premises in England next April, according to Altus Group, the property company.
Vivienne King, chairwoman of the Shopkeepers’ Campaign, which advocates for long-term business rate reform to help small shops stay in business, said it was a “step back for businesses that have relied on this support during challenging times”, adding: “The chancellor fails to appreciate how close to the edge our high streets shops are. This will leave many facing unmanageable bills and difficult decisions about their future.”
Kate Nicholls, chief executive of UK Hospitality, the trade body, agreed: “The reduced level of 40 per cent is another cost that businesses have to deal with. For those small and medium-sized operators, their rates bills will still go up in April.”
She added that with an increase in minimum wage and national insurance, “all of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3 billion for the sector”.
In her budget, Reeves also launched a “conversation” on the longer term ambition for business rates, and said the government is committed to delivering a “fairer business rates system that supports investment and is fit for the 21st century”.
She committed to lower business rates for high street stores to help “level the playing field” with their online rivals.
Predominantly bricks-and-mortar retailers have for years complained that business rates — a property tax charged on most commercial properties to fund local services — are archaic and hand an unfair cost advantage to online retailers such as Amazon. Labour had pledged in its election manifesto to redress the balance to help revive town centres.
Reeves said that from 2026-27 permanently lower tax rates for “the most valuable properties” would be introduced. She said the change would be funded by introducing a higher multiplier for the most valuable properties, including distribution warehouses used by “online giants”.
Helen Dickinson, chief executive of the British Retail Consortium, the trade body, said: “While retailers welcome future action on rates, they are assessing the impact of today’s announcement. There remain many unanswered questions about the new charges and discounts that will be levied from 2026. Charging more to businesses with higher rateable values may punish not only distribution hubs, but also larger stores, which play a key role in attracting footfall to high streets and town centres.”
She added that, with retailers paying more than 21 per cent of all business rates in the economy, “the solution is not to simply shift the burden around, but to look outside retail to address the disproportionate impact of business rates on the industry”.
John Webber, head of business rates at Colliers, the property company, said the chancellor’s announcements regarding business rates were“desperately disappointing”. He added: “Despite pre-election promises of business rates reform, nothing of significance was announced. There is to be no consultation, just a discussion document, and the measures announced hardly put a sticking plaster over the gaping wound rather than bringing in any fundamental reform.”