Across the UK high street, confidence among small retailers is at an all-time low as mounting business rates threaten not just the viability of individual shops, but the employment of thousands.
With the Autumn Budget only weeks away, there is an urgent call for substantial reform with trade bodies warning, without government action as many as 60,000 small shops and 150,000 jobs could be lost in the coming year.
The Co-op, alongside a growing coalition of business groups and survey data, is spearheading demands for the Chancellor to introduce permanent, targeted relief for the nation’s small retailers. Current relief schemes are widely viewed as insufficient and overly complex, with 77% of surveyed independent shop owners stating that business rates reform is essential for their economic survival, while nearly half report that growth is impossible under present conditions.
The sector’s core complaint focuses on the “cliff edge” effect – sudden, steep increases in business rates for expanding businesses and the lack of meaningful, ongoing support for premises with a rateable value under £500,000. With the government now considering switching from “slab” to “slice”-based marginal rate systems, and much-anticipated permanent lower multipliers for retail, hospitality, and leisure set to debut in April 2026, many businesses are hanging by a thread waiting on further details and direction from Rachel Reeves in the upcoming Budget.
Business rates reform will undoubtedly have wide-ranging impacts on small high street retailers, with both immediate and long-term effects on viability, financial planning, and investment capacity.
Risks and Ongoing Challenges
- Threshold changes for Small Business Rate Relief could mean some small shops lose eligibility if revaluations push their RV above current caps; indexing relief thresholds to reflect market changes is critical. A new Supporting Small Business Relief Scheme similar to that in place at the start of the current 2023 rating list which saw support for those who saw their RV surpass the relief threshold, has been touted for the 2026 rating list.
- Reduction in Retail, Hospitality & Leisure (RHL) rate relief from 75% to 40% in 2025/26 may cost convenience retailers an estimated £68 million, squeezing already tight margins and raising closure risks during economic downturns.
- Funding reform by applying higher multipliers to large premises could have indirect consequences: supply chain cost increases may eventually be passed on to small retailers and their customers, especially through higher wholesale prices.
At Dunlop Heywood, our business rates experts are advising clients to prepare for both opportunity and risk. Transitional relief, changes to thresholds, and evolving eligibility criteria for small business relief mean it is vital to review property portfolios, model worst-case scenarios, and ensure every available avenue for relief and appeal is in use.
If your business is struggling with rising business rates or uncertainty about how upcoming reforms may impact your portfolio, the time to act is now. Contact Dunlop Heywood’s specialist business rates team for an in-depth audit and strategy review – let our experts help you secure the maximum relief available and influence the policy debate at this critical moment.