Over the next three years, small shops, cafes and hairdressers in England could see their bills rise by an average of 52%.
This week the Federation of Small Businesses (FSB) published new analysis, which shows small businesses across England are facing a significant hike in bills.
The rise comes after the government cut relief for 230,000 small businesses in the retail, hospitality and leisure (RHL) sectors.
In 2024’s autumn budget, the government announced RHL business rates relief would be reduced from 75% to 40% for the 2025/26 financial year. However, the 40% reduction is due to end on 31st March this year.
What’s more, changes to business rates from April, including phasing out Covid relief and updated property valuations, are expected to add thousands of pounds to bills.
In a letter to the government, the FSB has called on ministers to make full use of available relief, noting that only a quarter of potential support is being used. Experts also told the government a 20p cut in the multiplier – used to calculate bills – was needed to match previous discounts, but the government only announced a 5p reduction.
The FSB warned the combined impact of the loss of the 40% discount, the revaluation of rateable values and changes to the business rates formula would see bills increase by around 52%.
To give context, a small shop whose rateable value has increased from £16,000 to £19,104 would see its rates bill rise from £4,790.40 in 2025/26 to £7,297.73 by 2028/29.
Tina McKenzie, policy chair at the FSB, said: ‘Striving small businesses in retail, hospitality and leisure – from bakeries and coffee shops to garden centres, gyms and dry cleaners – are on the brink unless [the] chancellor makes a decisive intervention now.
‘Ahead of the last budget, the chancellor led 230,000 small businesses in retail, hospitality and leisure to believe that something akin to their current 40% rates relief would be brought in permanently.
‘The reality is the relief will be only a fraction of that, and only a quarter of the potential relief the government has at its disposal. That needs to change, with the full relief allowance being deployed.’
‘The tax timebomb that’s currently ticking will see three years of soaring bills, threatening our high streets and jobs and services they provide,’ she added. ‘Combined with other cost pressures going up in April as well, the Chancellor has to be realistic that without action on business rates relief, the burden will become too much to bear for some, who will either shrink or close down altogether.’
Image: Artur Kraft/UnSplash
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