Rising business rates threaten 200 flagship high streets - warning

Rising business rates in the UK are threatening the viability of over 200 stores on flagship high streets, raising concerns about job losses, reduced investment and inflationary pressures on consumers. A recent survey by High Streets UK revealed that 81% of businesses on major high streets view business rates reforms as a critical challenge. Other far-reaching changes affecting business rates were brought into law in the ‘Non-Domestic Rating (Multipliers and Private Schools) Act 2025 and received Royal Assent on 3^rd April. This gives the Government the power to implement a special multiplier for properties above £500,000 RV. Urgent lobbying is still continuing to try to ensure this power remains unused. The consequences are said to include:

• Job Losses: Up to 5,500 positions could be at risk as businesses adjust staffing to manage costs.
• Price Increases: 64% of businesses plan to pass on higher costs to consumers, potentially raising prices by 3%.
• Store Closures: Over 200 stores face permanent closure, with up to 600 trading units at risk overall.

Dee Corsi, Chair of High Streets UK, criticised the reforms, stating: “The plans would be a disaster for jobs, investment, growth and ultimately lead to higher prices for consumers”. Broader Criticism of the Business Rates System The UK's business rates system has long been criticised for being outdated and burdensome with the Confederation of British Industry (CBI) and other trade groups arguing that it stifles investment and innovation. Rain Newton-Smith, CBI Chief Economist, described business rates as "a tax on investment," urging fundamental reform to support productivity and green initiatives. Similarly, Emma McClarkin of the British Beer & Pub Association called the system "unfit for purpose," emphasising its negative impact on hospitality businesses. The British Retail Consortium (BRC) has also demanded – without success - a 20% reduction in business rates for retail properties for the 2025/26 financial year. The BRC argued that retail pays a disproportionate share of taxes relative to its economic contribution, making reform essential for the sector's survival. Various stakeholders have proposed measures to modernise the system that include:

1. Impact Assessments: High Streets UK recommends conducting full assessments of multiplier increases before implementation.
2. Freezing Increases: Calls have been made to freeze any hikes in the higher multiplier until 2027/28 to provide stability.
3. Ring-Fencing Revenue: A portion of locally collected rates could be reinvested into corresponding high street areas to improve services and infrastructure.
4. Extended Reliefs: Extending empty property relief and offering transitional relief for businesses facing higher multipliers post-2026 revaluation are also suggested.

The Government has acknowledged the need for reform but has taken limited steps so far. From April 2025, relief for retail, hospitality, and leisure properties will be reduced from 75% to 40%, while properties with rateable values above £500,000 will face increases. Critics argue these measures fall short of addressing systemic issues.