Up to 400 significant retail stores could face the threat of closure, which may endanger as many as 100,000 jobs if the government’s plan to increase business rates for larger stores goes into effect, warning retailers.
Under the new set of rules which the government is contemplating ahead of the autumn budget in November, some of the UK’s most prominent retail spaces, including supermarkets and department stores, would end up paying more in property taxes.
The increase in taxes, especially for larger venues like warehouses and offices, is intended to provide discounts for smaller business properties, such as independent cafes and pubs. This proposal comes after the Labour government vowed to reform the business rates system to make it fairer.
CEOs from major retailers such as John Lewis, Lidl, and B&Q met with Chancellor Rachel Reeves last week to request that the proposed surcharge be exempt for the retail sector.
The new rules would affect all business properties with a rateable value exceeding £500,000. This potentially includes 4,000 larger retailers, according to the British Retail Consortium, which has already assessed the impact of increased costs on retail businesses in the past. Their findings suggest that without change, up to 400 big stores could close, with retailers possibly raising prices or reducing staff to sustain their earnings.
Many of these retailers are critical ‘anchor tenants’ who draw foot traffic to high streets and shopping centers, thereby benefiting local cafes, pubs, and other small retailers.
Helen Dickinson, the CEO of the British Retail Consortium, highlighted the importance of large shops in sustaining local economies and communities, stating that many such locations have vanished due to rising costs, leaving empty spaces where vibrant businesses once thrived.
Dickinson noted, “Britain’s largest shops are the main draw for high streets, shopping centers, and retail parks, supporting thousands of surrounding cafes, restaurants, and smaller, independent shops. After years of increasing costs, way too many stores have vanished — leaving behind empty shells at the heart of our communities.”
The government’s tentative plans may well alter to address the concerns raised by retail executives regarding the “cliff edges” in the tax system that could hinder small businesses from expanding. Such changes would aim to calculate rates differently and to better assist investment in business premises. The interim report released this week supports these intentions.
Kate Nicholls, spokesperson for the hospitality industry in the UK, welcomed the government’s action to rectify the tax system, which had “unfairly penalized hospitality businesses,” expressing satisfaction with the initiatives to scrap the tax thresholds that discourage expansion and to commit to lowering the tax burden on hospitality venues.
While the chancellor has indicated consideration for these revisions, no definitive legislation has been enacted, and the outcome for the livelihoods of thousands of workers and the viability of the retail sector remains uncertain.
Source: https://www.theguardian.com/business/2025/sep/12/business-rates-rise-big-shops-risk-retailers-uk
