UK retailers are pressing Chancellor Rachel Reeves to deliver on her promise to reduce the burden of business rates on high street businesses, as a £2.7 billion tax hike looms. The tax increase is expected to disproportionately affect smaller retail, leisure, and hospitality firms.
Significant Tax Increases Expected for 252,000+ Businesses
According to analysis by Altus Group, over 252,000 businesses—including shops, cafes, pubs, restaurants, and bowling alleys—are set to face a steep increase in property taxes starting in April 2025. This is due to the expiration of a 75% business rates relief, capped at £110,000. Additionally, businesses across all sectors will face a £545 million tax hike, with £250 million impacting the retail, leisure, and hospitality sectors.
Retailers Urge Extension of Relief to Protect High Streets
Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), stressed the need for continued support to keep high streets thriving. “The chancellor has the power to extend the retail, hospitality, and leisure relief,” said Goodacre. “This is absolutely vital if high streets are to grow.”
Labour Faces Pressure to Reform the Business Rates System
Altus Group’s president of property tax, Alex Probyn, called on Rachel Reeves to prevent a “cliff edge” for the retail, hospitality, and leisure sectors. He emphasized that the chancellor must fulfill Labour’s manifesto promise to ease the tax burden on high streets.
Labour’s pre-election manifesto pledged to overhaul the business rates system, which it described as unfair and discouraging investment. However, no details have been provided yet on how the new system will work.
Retail Giants Call for a 20% Reduction in Business Rates
In a separate push, over 70 major retailers—including Tesco, Marks & Spencer, and Ikea—have called for a 20% cut in business rates. The British Retail Consortium (BRC), which coordinated the letter, warned that the tax could lead to widespread shop closures. BRC CEO Helen Dickinson stressed the need to avoid a “business rates cliff edge” and urged the government to create a fairer system that promotes local investment.
Retail Sector Faces Disproportionate Tax Burden
Research from the BRC shows that retailers are paying 7.4% of all business taxes, despite accounting for just 4.9% of the UK’s total economic output. The group argues that a 20% reduction in business rates would help level the playing field and remove the biggest barrier to investment in high streets.
Calls for Urgent Reform Grow Louder
With high streets still struggling to recover from the pandemic, retailers are urgently calling for changes to the business rates system ahead of the 2025 tax changes. They argue that without reform, many high street businesses may not survive the next few years.
