Retailers Urge Chancellor Rachel Reeves to Deliver on Promise to Ease Business Rates Burden
Retailers are calling on UK Chancellor Rachel Reeves to honor her commitment to reduce the strain of business rates on high street businesses, as new analysis warns of a looming £2.7 billion tax hike that could disproportionately impact small retail, leisure, and hospitality firms.
According to a report by real-estate intelligence firm Altus Group, more than 252,000 businesses—including shops, pubs, cafes, restaurants, and bowling alleys—are expected to face steep tax increases from April 2025. The increase will follow the expiration of a 75% business rate relief capped at £110,000.
Rising Costs Threaten Recovery of High Streets
Altus Group’s analysis reveals that all property types will collectively face an additional £545 million tax burden next year, with £250 million of that falling directly on retail, leisure, and hospitality sectors. This comes as inflation remains a key factor in driving the tax increase.
Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), warned that ending the relief could harm high streets that are still recovering from the pandemic. “The chancellor has the power to extend the retail, hospitality, and leisure relief, which is vital if high streets are to revitalise and thrive,” Goodacre stated, urging the government to maintain this critical support.
Alex Probyn, President of Property Tax at Altus Group, echoed this sentiment, emphasizing the importance of immediate action: “Despite the £22 billion fiscal gap, the government must avoid a cliff-edge scenario for these sectors at the upcoming budget while fulfilling Labour’s promise to ease the burden on high streets.”
Longstanding Calls for Reform Intensify
The retail sector has long criticised business rates as outdated and unfair. Efforts to reform the system began under former Chancellor George Osborne in 2015, who introduced relief for smaller businesses. However, with the rise of e-commerce, many retailers argue that more comprehensive reforms are necessary to compete with online rivals.
The impact of inflation has further compounded the problem, with rising rates adding to financial pressures while footfall on high streets remains below pre-pandemic levels. The inflation figure for September 2024, which will influence next year’s rate increases, is expected to be around 2%, down from 6.7% the previous year. Official data is scheduled for release on Wednesday.
In its pre-election manifesto, Labour pledged to replace the current business rates system with a fairer framework, arguing that the existing arrangement discourages investment and creates uncertainty for high street businesses. However, the party has yet to unveil specific details about the new system.
Retail Giants Join the Chorus of Concern
Last week, more than 70 major retailers—including Tesco, Marks & Spencer, and Ikea—wrote to Reeves, demanding a 20% reduction in business rates. The letter, coordinated by the British Retail Consortium (BRC), warned that without meaningful reform, many stores could face closure.
The BRC proposed a “retail rates corrector” mechanism, urging the government to address the disparity between high street businesses and online competitors. Business rates are levied by local councils based on the rental value of properties, including warehouses, offices, and retail spaces.
Government Response
A government spokesperson reiterated Labour’s commitment to supporting businesses: “We are focused on making the business rates system fairer, capping corporation tax at 25%, and developing a business tax roadmap to provide greater certainty for future investments.”
As pressure mounts ahead of the next budget, retailers await concrete action from Reeves and the Labour government to mitigate the financial challenges facing the high street. Whether the promised reforms will arrive in time remains a pressing question for business owners across the country.
Source : Swifteradio.com
