Thousands of businesses in retail, hospitality, and leisure sectors are bracing for a 140% increase in business rates, due to the Labour government’s decision to cut reliefs from 75% to 40% as of April 1.
Key Changes and Impacts
- Policy Change:
- The Retail, Hospitality, and Leisure Relief Scheme introduced by the Conservative government in 2022 provided 75% relief (up to £110,000).
- Labour’s Autumn Statement announced this would be reduced to 40%, effective from April 2025.
- Projected Increases:
- Retailers: Average annual bills rise from £3,751 to £9,003.
- Restaurants: Bills increase from £5,563 to £13,351.
- Pubs: Rates rise from £4,017 to £9,642.
- Nightclubs: Expected to pay £18,245, up from £7,479.
- Gyms: Bills jump from £2,942 to £7,060.
Sector Challenges
- Retailers: Store closures forecasted to hit 17,349 in 2025, exacerbated by rising business rates, minimum wage increases, and higher employer national insurance contributions.
- Pubs: Over 400 pubs closed in 2024, with 1 in 10 at risk of imminent closure.
- Nightclubs: 37% of clubs have closed since March 2020, with closures averaging three per week.
- Gyms and leisure businesses: Also facing significant financial pressure.
Criticism and Outlook
- John Webber of Colliers highlights the unsustainability of these hikes, arguing that businesses already facing inflationary pressures and wage increases cannot absorb these additional costs.
- Labour’s promise to “Save the High Street” is contradicted by this policy, as Webber warns of devastating consequences when the bills arrive in April.
Future Developments
- While the government has proposed a lower business rates multiplier for the sector, it won’t be implemented until April 2026, coinciding with rateable value increases from revaluations.
