UK retailers are pressing Chancellor Rachel Reeves to uphold her commitment to ease the business rates burden on high street businesses. The demand follows concerns over a looming £2.7 billion tax increase that will primarily impact smaller retail, leisure, and hospitality firms.
Projected £2.7 Billion Tax Hike to Hit Small Businesses
According to an analysis by real estate firm Altus Group, more than 252,000 businesses—including shops, cafes, pubs, and bowling alleys—could face a sharp rise in business rates starting in April 2025. This follows the end of a 75% rates relief, capped at £110,000. Additionally, companies across various sectors are expected to bear a £545 million tax hike, with £250 million of this burden falling on retail, leisure, and hospitality.
Calls to Extend Business Rates Relief for High Streets
Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), has stressed the need to extend relief. “The chancellor has the power to extend this essential support if high streets are to thrive,” said Goodacre, urging the government to take swift action.
Labour’s Commitment to Reform Under Scrutiny
Altus Group’s president of property tax, Alex Probyn, added that Reeves must avoid creating a “cliff edge” for affected sectors while delivering on Labour’s promise to reduce the business rates burden. Labour’s pre-election manifesto pledged to replace the current system with a fairer regime, but detailed plans have not yet been outlined.
Retailers Push for a 20% Cut in Business Rates
Major retail brands, including Tesco, Marks & Spencer, and Ikea, have called for a 20% reduction in business rates, warning that the tax could lead to widespread closures. The British Retail Consortium (BRC) is also advocating for a “retail rates corrector” to level the playing field between brick-and-mortar retailers and their online competitors.
The Growing Burden on Retailers
Helen Dickinson, CEO of the BRC, warned that the broken business rates system is preventing investment in high streets. “A 20% discount would fix the disproportionate burden on our high streets for good,” she said, pointing out that retailers pay 7.4% of all business taxes, despite accounting for only 4.9% of the UK economy.
Urgent Need for Business Rates Reform
With the 2025 tax changes fast approaching, pressure is mounting on the government to act. Retailers are increasingly vocal about the need for reform to support high street recovery and avoid further shop closures.