Urgent need for business rates reform

The government has confirmed its commitment to reforming the current business rates system though for many it is not moving forward quickly enough.

The chancellor’s spring statement announced that an interim report on the future of the system will be published in the summer.

However, no details of the proposed changes are set to be announced until the next autumn Budget later this year.

For the time being retail, hospitality and leisure businesses will be given a 40 per cent relief on their business rates in 2025/26.

And the small business tax multiplier for properties with a rateable value below £51,000 will also be frozen for 2025/26.

Businesses should check that they are paying the reduced rates.

The government has been consulting for some time on longer-term measures to support the hard-pressed high street and the hospitality and leisure sectors.

And it has pledged over the course of this Parliament to create “a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century.”

The call from businesses is for the government to move faster in introducing its reforms.

The Federation of Small Businesses (FSB) policy chair Tina McKenzie said: “The chancellor has rightly kept her word not to further increase business taxes and we urge her to go further in her next full Budget and actually lower the tax burden, including delivering on the promises made by Labour in opposition to transform the out-dated business rates system and make it fit for purpose in a modern economy.

“Freeing up funds for small firms to invest in their business rather than having money swallowed up in high taxes is the best way to achieve growth.”

Trade group UK Hospitality says the sector faces an additional £500m in business rates, as a result of relief being lowered from 75 per cent to 40 per cent this month.

A spokesperson said: “We are urging the government to urgently bring forward a plan for hospitality businesses that enables the sector to unlock growth and jobs.

“This plan would have to set out how the government intends to reduce the costs and red tape that plague the sector.

“This should include the Treasury ensuring its business rates reform, to be unveiled in the autumn, offers the maximum discount for hospitality businesses.”

Entrepreneur and Dragons’ Den investor Theo Paphitis is those backing the reform of the system.

The chairman of Ryman Stationery is calling for a level playing field across the retail sector and says the reform has to acknowledge the way people shop has changed.

He told the 2025 Retail Technology Show that the current system “will kill the high street on its own at some stage.”

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