It’s not great news for retail and hospitality – but there ARE things that can be done...
The retail and hospitality sectors are around a tenth of the economy, yet they pay a third of all business rates in the UK. With this week’s Spring Budget set to cut business rates relief for sector, the outlook is looking pretty bleak.
Andrea Barnes, Head of Business rates at Rerate, is an advocate for businesses and passionate about helping rates payers to save money on their commercial properties.
Here, she gives her take on just what these changes mean for organisations affected – and what they can do about it.
“The new tax year is fast approaching and along with it the Spring budget – which spells doom and gloom for the retail and hospitality sector. The end of the higher percentage of hospitality relief business rates relief will hit hard, with many businesses fearing they won’t be able to survive the price hikes.
Yet is there anything that can be done to support businesses at this time?
So, what are the facts?
It was announced in October 2024 that business rates relief will expire in Spring 2025, notably with hospitality relief will be reduced from 75 to 40% in the new tax year.
The hospitality sector has benefited from business rates relief since it was introduced in 2020 as part of the government’s pandemic response. These changes mean a quadrupling tax burden – and it’s going to hurt.
And just what does this mean for the sector?
Unsurprisingly, the industry is seriously concerned about the long term implications of this of a quadrupling tax burden.
Hospitality businesses fear it could mean cuts to staffing or job losses and insist they won’t survive without the current discount. The new multipliers for retail are only published in 2026.
A quarter of a million high-street properties in England are facing an average 140% rise in their bills for the 2025-2026 tax year. The typical shop will see its business rates bill climb from £3,500 to £8,600 next April. The average restaurant will see its bill rise from £5,000 to £12,000
For our high streets to invest and grow – not just simply survive – and continue playing a vital role in our communities, they must be profitable. Hospitality is still recovering from the hangover of the pandemic, and the stark reality is that this will cause many pubs and restaurants to close down by the end of the year.
This is additional pressure to the cost of living crisis, which has already seen a trading slow down as the consumer battens down the hatches.
And what about new multipliers?
Legislation was confirmed in the autumn budget to permanently lower multipliers for hospitality and retail from 1/4/26. The multipliers are currently 0.499 and 0.526. To fund this, new multipliers will be paid by the top 1% of high-value properties, such as large warehouses.
When the new multipliers are released next year, many landlords are likely to raise the rents set to occupiers, meaning no positive effects of the rates payables lowering.
What do those in the industry say?
We spoke to Tom McCartney, Operations Director for Shiko Group, the Manchester based hospitality outfit with a portfolio of bars, restaurants and event spaces including The Lawn Club, The Dome and The Stables.
He said:
“As a young company who is in a period of growth, the reduction of the business rates relief, like for all of the hospitality/retail industry will have a huge knock on effect, regardless of the size.
“We are an industry who already in a turbulent economy have to work hard to make the numbers stack up. We have seen price increases across all suppliers and then factoring in the new NLW and NI increase, it is clear that like 2024 we may see more closures of some amazing operators. It’s not just as simple as passing the cost on to our guests.
“A more phased pragmatic approach by the government should have been taken to help our industry grow instead of being decimated.”
So, what – if anything- can be done?
Without Government action in the Spring budget, thousands of pubs or restaurants will close before the new multipliers come into effect on 1/4/26.
Yet there are businesses and figures who want to champion the cause of those organisations that can be affected – and there may even be things that businesses can do to help themselves.
- Voice our opinions in consultation papers to lobby parliament and be the voice of the sector
- Lobby the government to give local councils additional cash for hardship funds for affected businesses who need it
- Engage with a business rates expert who will be able to cut through the chatter and look at ways to reduce the rates that you are paying.
- Hold your nerve – it’s going to be tough, but there is support out there if you know where to look for it.
