Retail and Hospitality Face £2.6 Billion Business Rates ‘Cliff Edge’ Ahead of Budget

Retail and hospitality businesses could face a £2.6 billion rise in business rates this April, tax analysts have warned.
Eligible shops, pubs, and hotels can receive 75 percent off their business rates bills until March 31.
However, the public finances watchdog, the Office for Budget Responsibility, hasn’t included any future discounts into its fiscal forecasts.
Firms in the industry could face a total bill of £2.66 billion in business rates, if the inflation rate comes in at 1.9 percent, as projected by economists.
According to data firm Altus Group, the retail, hospitality, and leisure sectors face a “cliff edge” moment, unless Labour extends the scheme in the October Budget.
Labour has warned that the upcoming budget will be “painful” and said there was a “£22 billion black hole” in public finances.
While Prime Minister Sir Keir Starmer said that his government will make all decisions with the objective of economic growth in mind, the Treasury is expected to announce a number of tax changes to boost its revenue.
The British Retail Consortium (BRC) has warned that the high burden of business rates limits growth in the retail sector and restricts its investment capacity.
It reported closures of 6,000 UK shops in the past five years, where in two-thirds of these closures, business rates had pushed firms to shut down their business.
The BRC data say that retail pays 7.4 percent of all business taxes (£33 billion), a share 1.5 times greater than its share of the overall economy (5 percent of GDP). Of this total tax bill, 11 percent of profits is made up of business rates, the highest of all business sectors.
BRC Chief Executive Helen Dickinson urged the government to introduce a 20 percent Retail Rates Corrector—an adjustment in business rates paid on retail properties—to help drive investment across the country. Over 70 retail CEOs have written to Chancellor Rachel Reeves, calling for the introduction of the corrector.
The BBPA is advocating for an extension of the current 75 percent business rates relief. The group said the scheme saved many pubs from permanent closure.
In a letter signed by 80 senior figures from the brewing and pub sector the BBPA told Reeves: “This is an historic low and the industry simply cannot afford other costs, let alone tax increases. Put plainly, for thousands of pubs and brewers across the country there is nothing left to give.”
With 50 pubs closing each month in England and Wales, the BBPA said failure to act by the government will lead to widespread pub closures and a loss of local jobs.
In its preelection manifesto, Labour said it would reform the business rates system, but hasn’t announced any changes since coming into government.