Britain's retail industry, already struggling with rising costs, faces a new challenge. The government is proposing higher business rates for large-format stores.
The British Retail Consortium (BRC) warns that this could force up to 400 major shops to close. That would put around 100,000 jobs at risk and reduce local government revenue significantly.
Impact of the proposed business rates surcharge
The government wants to introduce a higher business rates band for properties with a rateable value over £500,000. This aims to fund a permanent reduction in business rates for smaller retail, hospitality, and leisure businesses.
However, the BRC warns that this plan would hit large retailers hard. These stores already carry a big share of the sector’s tax burden.
Helen Dickinson, Chief Executive of the BRC, explains the role of large shops:
“Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks. They support thousands of surrounding cafés, restaurants, and smaller independent shops.”
The BRC estimates that if all 400 at-risk stores were to close, up to 100,000 jobs could be lost. Local councils’ business rates receipts from retail would fall by over £100 million a year.
Strain on retailers amid rising operational costs
Retailers are already under pressure from rising employment costs, high taxes, and climbing rates bills. Around 4,000 large-format stores with a rateable value over £500,000 pay about a third of retail’s total business rates.
Given the tight profit margins in retail—2-4% for food—a big rise in rates could force shops to raise prices, cut staff, or even close entirely.
The BRC suggests this could be done without costing the public purse. Large stores could be removed from the new higher business rates band.
At the same time, rates could rise slightly for other big properties, like office blocks, where business rates make up a smaller share of costs. This approach would limit the impact on jobs and prices.
Government's response and future outlook
The government recognises the challenges faced by high streets. It plans to introduce a permanent reduction in business rates for retail, hospitality, and leisure premises. This will replace some previous reliefs and will be funded by the new higher business rates band on large properties.
Chancellor of the Exchequer Rachel Reeves has promised reforms to help small businesses expand. She aims to remove “cliff edges” in the tax system that penalise growing businesses. She emphasised that fairer tax reliefs are key to supporting economic growth.
Still, the BRC remains concerned that the proposed changes could harm large retailers without enough support for the wider retail sector. They argue the business rates system is outdated, overly complex, and economically damaging.
The BRC is urging the government to reconsider its approach in the upcoming Autumn Budget.
As the government prepares to outline its business rates policy on 26 November, the retail industry is watching closely. Businesses hope for a balanced approach that supports both large and small stores without threatening jobs or local economies.
