Reeves Budget Shake Up Leaves High Street Facing Steep Business Rates Rise

Retailers and hospitality operators are bracing for a sharp increase in business rates after the recent Budget, with many industry leaders warning the changes will intensify challenges for high street businesses rather than deliver the promised relief. Rachel Reeves suggested that around 750000 small shops, pubs, restaurants, and bars would benefit from adjustments to business rates during her Budget address, lending hope to business owners who have struggled since the previous fiscal announcement. However, a closer inspection of the policy details has revealed that many independent retailers and hospitality firms now face substantial hikes in their property tax liabilities.

For John Jones, proprietor of the department store Philip Morris and Sons, the initial optimism quickly faded as calculations showed his business rates bill rising by 45 percent across three locations, marking an unprecedented high. The shift in how property bills are computed, initially presented as an equaliser between high street retailers and online competitors, has in practice imposed a heavier burden on many independent businesses.

Tax advisers at Ryan estimate that around 3480 retail properties will see their rates climb by an additional £112 million from April. This rise is attributed to higher rateable values as well as the withdrawal of pandemic business rates relief. The Treasury indicates it has counterbalanced this with a lower overall business rates multiplier, but the British Independent Retailers Association projects a 15 percent average increase for independents even after accounting for reliefs and multipliers.

The hospitality sector faces similar strains, with approximately 5370 establishments, including hotels, holiday parks, and music venues, expected to pay £182 million more next year. Hoteliers such as Shaun Whitehouse of the Lanes Hotel in Yeovil report that many operators feel let down by the government, pointing out that continued tax pressure is threatening the survival of businesses already operating on the margins. Larger operators have also expressed disappointment, with Whitbread, owner of Premier Inn, anticipating a £50 million impact on annual profits and the City Pub Company forecasting a 30 percent business rates rise over three years.

Casual dining and hospitality chains are also affected; K10 Restaurants, for example, faces a £40000 annual rates increase, restraining future expansion. For some, like Gusto Pronto, the rates bill is set to rise by nearly 39 percent to more than £110000, underlining the scale of the challenge facing smaller operators. Despite this, the Treasury underscores a £4.3 billion support package intended to cap increases for independent pubs, providing a degree of assistance for some eligible businesses.

Larger retail groups and specific sectors, on the other hand, are comparatively insulated from the rises. Major supermarket chains are set to see little to no increase as the value of their properties rises less sharply than smaller shops, yielding a possible reduction of around £70000 in business rates for large superstores. Museums, art galleries, and creative industries will also benefit, with significant reductions in rateable values and prolonged reliefs for film and television studios. Airports represent another sector experiencing steep increases, with Heathrow and Gatwick anticipating business rates bills to more than double in coming years, which could impact planned investment programmes.

The response from independent business owners and their trade groups is one of frustration. While the government has positioned the reforms as a levelling measure, many in retail and hospitality argue that the changes favour large players and online giants at the expense of traditional high street businesses, leaving many smaller operators questioning the future sustainability of their enterprises under the revised tax regime.