Small businesses face an average 52% hike in business rates which poses an “existential threat” to local high streets in England, the Federation of Small Businesses (FSB) has said.
The group’s new analysis looks at the combined impact of the loss of the previous 40% discount for retail, hospitality and leisure (RHL) firms, a revaluation of the rateable value of premises, and changes to the formula behind the bills.
For example, a small shop with a rateable value increasing from £16,000 to £19,104 would see business rates rising from £4,790.40 in 2025/26 to £7297.73 by 2028/29.
In a letter to the government, FSB said the full relief available to them should be deployed for small RHL firms.
The government has allowed itself the potential to reduce the multiplier by 20p, but it has only been cut by 5p.
FSB is also calling for an increase in the rateable value at which business rates are payable, from the current level of £12,000 to £25,000.
FSB policy chair Tina McKenzie 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 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 the jobs and services they provide. 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.”
The FSB is the latest business group to call on the government to act on business rates.
Rachel Reeves has admitted that extra support will be announced for pubs, but hospitality and retail groups have said the help should be expanded to cover their sectors too.