Business rates will be trimmed for 750,000 retail and leisure premises in England next year, but the reductions will be paid for by an increase on properties worth more than £500,000, including warehouses.
Chancellor Rachel Reeve said in her second Budget she had listened to the sectors and rates would be ‘the lowest since 1991.’
A support fund will be created for qualifying properties that will see larger increases to help them to transition.
‘The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation,’ says Helen Dickinson, British Retail Consortium ceo.
‘This Budget offered much-needed relief for some retailers, but fell short of the bold action needed to secure the long-term future of our high streets and mitigate the inflationary pressures which are currently pushing up prices for households. While the announced changes to business rates are a step in the right direction, many felt the Chancellor should have gone further. The 5p rates reduction for retail, hospitality and leisure properties with a rateable value below £500,000 is unlikely to fully fix the situation where retail, as 5% of the economy, pays over 20% of all business rates. Including supermarkets and anchor stores in the new surtax is a retrograde step that does little to mitigate the rising cost of food and essentials. Larger stores, which already pay one third of the industry’s business rates bill and employ around a million people, should have been exempted from a surtax intended to fund support for the high street.’
‘Despite lowering business rates for many retail and hospitality businesses through higher rates on warehouses used by online retail companies, the fact remains that the local high street has many empty retail and hospitality premises,’ says Michael Shapiro, Spencer West commercial property partner.
‘While an overhaul is scheduled for April 2026, this is something that needs to be addressed with urgency. Hospitality, leisure and retail businesses continue to struggle through the current system, which is further compounded by the rise in National Insurance in the last Budget and the incoming rise to the minimum wage in January.
‘The domino effect of this on retail and hospitality workers, builders, and tradespeople cannot be underestimated, and the impact is clear to see by walking along any high street.’
