Business rate bill to surge by 'over 140 per cent'

Businesses are facing a sharp rise of "140 per cent" in property costs due to the government's decision to cut relief for the retail, hospitality and leisure sector from 75 per cent to 40 per cent, property consultancy Colliers has warned.

The government’s decision to reduce business rates relief from 75 per cent to 40 per cent will see thousands of shops, restaurants, pubs, gyms, and nightclubs grappling with bills surging by over 140 per cent from the beginning of April.

This significant increase is expected to place further strain on an already pressured high street.

John Webber, head of business rates at Colliers, cautioned that the reforms could exacerbate challenges for retailers.

“The Labour government’s business rates policies will soon put even further pressure on the high street as bills for the new rating year start to drop through the letterbox next month.

“Labour said if it came into power it would save the high street. This slashing of reliefs will sadly do just the opposite as we’ll sadly see when the bills drop through the letterbox in the month ahead," The Times quoted Webber as saying.

The Conservative government introduced the retail, hospitality and leisure relief scheme in November 2022 to cushion the sector from high rates bills.

It provided eligible properties with 75 per cent business rates relief up to a cap of £110,000 per business. Rachel Reeves announced in October that this would be reduced to 40 per cent.

Colliers has calculated that this will mean that retailers benefiting from the relief will find their business rates bills increasing in April on average from £3,751 a year to £9,003.

Restaurants will face a rise on average from £5,563 to £13,351 a year. The rates bill for the average pub will also go up from £4,017 to £9,642 a year.

The business rates system, forecast to raise £26 billion in England this year, is a property tax charged on most commercial properties, including shops, offices, warehouses and factories.

Labour’s manifesto pledged to replace the business rates system by raising the “same revenue but in a fairer way” to “level the playing field” between the high street and huge online companies and to tackle the scourge of empty properties.

A Treasury spokesman said, “Without our action, business rates relief for retail, hospitality and leisure would have ended completely in April this year.

"Instead, we are protecting one in three business properties from paying business rates, extending 40 per cent relief for 250,000 properties in retail, hospitality and leisure and introducing a new permanently lower business rate in 2026, while more than half of employers will either see a cut or no change in their National Insurance bills.”