The government is believed to be set to exempt large retail premises from the highest business rates band in response to heavy lobbying from major retailers and the British Retail Consortium (BRC).
Sources have been quoted in respected media titles such as Retail Gazette, The Grocer and GreenStreetNews – all claiming the Chancellor Rachel Reeves has backed down under growing pressure.
The influential groups had argued that higher rates would risk shop closures and job losses. After months of intense negotiations, insiders now claim the decision would mark a significant shift in business rates policy, as the government responds to industry fears that placing the largest stores in a new top tax bracket would render many operations unprofitable.
The Government has not confirmed the growing rumours but business expectations have now been heightened with an announcement now anticipated in the November budget.
Originally, the Treasury proposed a “supplementary multiplier” – a higher tax rate for properties with a rateable value above £500,000 – to help fund permanent discounts for smaller retail, hospitality, and leisure businesses. However, backlash from the UK’s biggest retailers and high street advocates revealed how the additional costs, coinciding with wage and tax hikes, could force hundreds of shop closures and threaten thousands of jobs.
Retail leaders have successfully argued that further raising fixed property costs during a period of economic uncertainty would magnify food inflation, stifle investment, and exacerbate the challenges already faced by brick-and-mortar operators in competing with e-commerce giants.
What will change for businesses?
- The new rates regime – if finalised in the Autumn Budget – will permanently lower business rates multipliers for retail, hospitality, and leisure properties with rateable values under £500,000 starting in April 2026.
- While a higher tax band for non-retail properties is still expected, any retail exclusion would mean the biggest store sites will not face an extra levy. Instead, other high-value commercial properties, such as large offices, may fund the support.
Ongoing Pressure for Fundamental Reform
The debate has also brought fresh attention to the structural issues in the business rates system:
- Many stakeholders – retailers, real estate advisors, and regional bodies – support switching from the current “slab” system (where the top rate applies to the whole property value over a threshold) to a marginal “slice” model, which would tax only the value above each band at a higher rate.
- Permanent extension of reliefs for smaller firms is widely welcomed, but business groups caution that “cliff edges” in Small Business Rate Relief mean rapid jumps in costs for growing operators, discouraging expansion.
Further targeted consultation is underway ahead of next month’s Autumn Budget, with policymakers considering:
- Expanding Small Business Rate Relief to help firms grow without facing sudden cost surges
- Greater predictability and transparency in future rates
- Administrative reform as the administration of business rates moves from the Valuation Office Agency (VOA) to HMRC by year end
Expectations are high across the industry that these changes – while not the wholesale overhaul some hoped for – will have a meaningful impact on competitiveness, high street vitality, and long-term investment decisions.
For businesses, now is the time to assess the implications of the upcoming budget, check eligibility for reliefs, and consider the impact of potential reforms on property portfolios and expansion plans. For expert advice on business rates and mitigation contact: info@dunlopheywood.com