The UK government’s Autumn Budget 2025 has introduced a major shift in business rates policy, delivering tax cuts for small shops while imposing higher costs on large retail properties.
The changes aim to support high-street businesses facing persistent cost pressures, yet they have sparked contrasting reactions across the sector.
Lower rates aimed at supporting smaller retailers
From April 2026, retail, hospitality and leisure properties with a rateable value below £500,000 will benefit from permanently reduced business rates multipliers.
The small business multiplier will fall to 38.2p and the standard multiplier to 43p, levels not seen in decades. The government has also committed a £4.3 billion transitional support package to help businesses adjust during revaluation.
Local authorities will be compensated for lost revenue, but the reforms will be partly funded through a higher “high-value” multiplier applied to properties with a rateable value of £500,000 or more.
While this offers relief to many independent shops, it raises the financial burden for large outlets, major chains and distribution hubs.
Independent retailers welcome relief but warn challenges remain
Smaller and independent retailers have cautiously welcomed the tax reductions, saying they could help offset rising costs tied to labour, energy and compliance.
Industry groups note that despite modest sales growth earlier in the year, many non-food stores continue to struggle with low footfall and tight margins.
For some in the sector, the lower rates may offer breathing room after previous reductions in relief and sustained cost inflation. Yet there is concern that the support may not be enough to strengthen long-term resilience, particularly for shops operating in weaker local economies.
Major chains raise concerns over closures and rising prices
Large retailers have expressed strong concerns over the higher multiplier for high-value properties. Industry bodies warn that increased taxation could lead to shop closures, job losses and pressure to raise prices at a time when margins are already under strain.
The British Retail Consortium has cautioned that supermarkets and department stores — many of which serve as anchor tenants that drive high-street footfall — could be disproportionately affected.
If significant numbers of these larger stores close, the impact could ripple through retail centres and surrounding independent businesses.
Implications for the wider retail landscape
The Budget marks a decisive shift in how the UK intends to balance support for small shops and revenue from larger operators.
For international observers, the reforms highlight the complexities of property-based taxation for a sector facing structural change, cost inflation and evolving consumer behaviour.
Whether the new system strengthens the high street or accelerates consolidation among major retailers will depend on how businesses adapt once the new multipliers come into force.
