Reeves urged to deliver Labour’s manifesto commitment to lower burden on high streets

Chancellor Rachel Reeves is being urged to keep her promise to ease the pressure from business rates on high street businesses amid warnings of a looming £2.7 billion tax hike that would mainly hit smaller retail, leisure and hospitality firms.

According to analysis from the real-estate intelligence firm Altus Group, more than 252,000 shops, cafes, pubs, restaurants and businesses will be impacted in property tax from April next year when a 75 per cent relief up to a cap of £110,000 will end.

Business rates payers across all property types and sectors will share a £545m increase in the tax, according to Altus, based on the consumer prices index measure of inflation – £250m of which will be shouldered by the retail, leisure and hospitality sectors.

Andrew Goodacre, the chief executive of the BIRA, said, “The chancellor has the power to extend the retail, hospitality and leisure relief, which is absolutely vital if high streets are to be revitalised and grow. We urge the government to consider this crucial support for the retail sector.”

Alex Probyn, the president of property tax at Altus Group, added, “Despite the £22bn ‘black hole’ in the nation’s public finances, the chancellor must now prevent a cliff edge for the retail, hospitality and leisure sectors at her upcoming budget whilst also delivering upon Labour’s manifesto commitment to lower the undue burden already placed on our high streets.”

Labour, in its pre-election manifesto, pledged to replace the business rates system in England with a fairer regime, saying the current arrangement disincentivised investment, created uncertainty and placed an “undue burden on our high streets”. However, it has yet to outline what that new system will look like.

A government spokesperson said, “We’re supporting businesses through pledges to make the business rates system fairer, to cap corporation tax at 25 per cent and to publish a business tax roadmap so that future investments can be planned with confidence.”

This comes a week after more than 70 retailers including Tesco, Marks & Spencer and Ikea wrote to the chancellor calling for a 20 per cent cut to business rates, warning that the property tax could force tens of thousands of shops to shut.

In a letter coordinated by the British Retail Consortium (BRC) trade body, executives are pushing for a “retail rates corrector” on the levy, which is charged by local councils and linked to the cost of rent on properties from warehouses and offices to shops.

Helen Dickinson, the BRC chief executive, said the government “must avoid a business rates cliff edge” when the current relief scheme for high street businesses comes to an end.

“The biggest barrier to local investment by any retailer is the broken business rates system, which prevents the creation of new shops and jobs," she said.