Retailers warn of devastating impact from business rates surtax

New analysis by the British Retail Consortium (BRC) has revealed that up to 400 of the UK’s largest stores could close if the Government proceeds with a proposed business rates surtax on properties valued above £500,000.

The retail sector makes up 5% of the UK economy but contributes over 20% of all business rates. Large stores, often operating on slim margins of 2-4%, already shoulder around a third of this burden. Any further tax increases could force many to cut jobs, raise prices or shut down altogether.

Economic and community consequences

These large-format retailers employ approximately one million people, or one in three retail workers, and play a vital role in supporting high streets and retail parks. As anchor tenants, they attract footfall that sustains cafés, pubs and independent shops nearby.

The BRC warns that the closure of all 400 at-risk stores could result in the loss of up to 100,000 jobs and reduce councils’ annual business rates revenue by more than £100 million.

Call for urgent government action

While the Government plans to offer a permanent reduction in rates for retail, hospitality and leisure premises, this would be funded by the new higher tax band targeting large properties. The BRC argues that shifting this cost onto big retailers would have damaging ripple effects across communities.

Helen Dickinson, Chief Executive of the BRC, urged the Chancellor to use the Autumn Budget to exclude large retail stores from the surtax, instead spreading the additional cost across other commercial properties such as office blocks, where the impact on jobs and prices would be lower.

She warned: “Four hundred more large stores could disappear if the Government presses ahead. This would mean job losses, emptier high streets and less revenue for the Exchequer.”