Chancellor Faces Criticism as Luxury Retailers Benefit from Business Rates Overhaul

Rachel Reeves, the Chancellor, is under growing scrutiny as her recent reforms to the business rates system appear to benefit high end retailers Harrods and Selfridges while increasing costs for independent pubs and restaurants. Analysis by the tax consultancy Ryan Tax projects that Harrods will see its business rates bill fall by £1.1 million between 2025 and 2027, bringing annual charges for its Knightsbridge site to £8.7 million. Selfridges is expected to benefit from a £622,000 reduction, with its rates bill also falling to £8.7 million for its flagship Oxford Street location.

The reductions result from changes to the multiplier applied in calculating business rates, a property tax based on rental value. News of these savings has provoked a strong response from the hospitality sector, which faces increases instead of the promised relief.

UKHospitality chair Kate Nicholls described the situation as ‘outrageous’, arguing that luxury retailers are enjoying millions in tax reductions as local pubs and restaurants see their costs surge. She warned that the revised system runs counter to government assertions of levelling the playing field for hospitality businesses. Nicholls cautioned that the change risks further closures and job losses across the sector unless urgently addressed.

Wetherspoon chairman Sir Tim Martin criticised the perceived tax inequality, noting a lack of political urgency to address the pressures confronting pubs. Martin remarked that the general public is unlikely to be placated by significant reductions for luxury retailers if local pubs bear the financial brunt.

Nick Mackenzie, chief executive of Greene King, highlighted the long standing imbalance in business rates affecting the pub industry, underscoring the disproportionate burden faced by cost intensive, low margin businesses. He pressed for an equitable tax structure that genuinely supports pubs, without adding further financial strain.

The Chancellor’s reforms, outlined in the recent budget, have not delivered on promises to lower tax rates for small high street businesses. While Reeves indicated that cuts for smaller retailers would be offset by increased levies on large warehouses and online giants, hospitality leaders observe that the removal of pandemic era support has actually increased operating costs for many small venues. According to the British Institute of Innkeeping, ninety percent of surveyed publicans say they will be forced to raise drink prices to absorb higher rates.

A Treasury spokesperson responded by highlighting a £4.3 billion support package aimed at protecting venues. The department claims that, without this intervention, pubs would face a 45 percent increase in rates next year. This support, combined with licensing reforms and a continued freeze on draught beer duty, is designed to mitigate the impact of rising taxes.

Harrods and Selfridges declined to comment on the prospective savings. The debate continues as industry leaders call for comprehensive reform to address the long standing inequities in the business rates system.