Chancellor Rachel Reeves confirmed at The Budget on 26th November that she will introduce permanently lower business rates for retail, hospitality and leisure firms with the difference paid for by higher levies on big properties. Smaller retailers have been lobbying for business rates reform for years, due to concerns that the tax plays out unfairly between those taking space on the high street and the online giants, which currently only pay warehouse property taxes.
Here, Luke Davenport, Director in the Cheffins Commercial department, gives his view on what this means for the market.
“Whilst on the face of it, the ‘lowering’ of business rates for retail, hospitality and leisure businesses should be welcome news to these smaller firms, many will actually see an increase in their rates bill as of next April, once the 40% relief window (which has been in place since Covid) is closed. In reality, Reeves' announcement of a 5p cut to the rates multiplier will not turn the dial significantly for many local high street shops and pubs which the Government claims to be supporting. Genuine and substantial reform to the ratings assessment structure for retail, hospitality and leisure is required if these sectors are to stand a chance of benefitting from reduced property outgoings.
The much anticipated ‘surcharge’ for businesses with a rateable value in excess of £500,000 has been welcomed by many firms, who we understand were expecting a significantly higher rate to be applied. In addition, it is anticipated that many sectors will see a reduction in the rateable values at the next revaluation date in April 2026. The blue chip occupiers will be able to cope with these additional outgoings. However, occupiers operating on tighter margins (i.e. cold stores, vertical farmers and third party logistics operators) will be pinning all their hopes for an element of ‘deflation’ at the next revaluation date.”
For further information, contact Luke Davenport on [email protected], 01223 213666