UK major property consultancy Colliers has warned the government’s “promise to save the high street by increasing rates bills of bigger businesses will misfire for the UK economy”.

Colliers says its research shows “potentially millions of pounds in extra rates bills will be seen across all sectors – as new poorly thought-out legislation is rushed through parliament”. 

The business rates legislation will do “little to help grow the economy,” said John Webber, head of Business Rates at Colliers.

Its research claims to show how the plans will also increase the burden on the bigger retailers and hospitality businesses, “therefore discouraging employment and further investment in the sector, countering the government’s claims ‘to be saving the high street’”.
 
Webber’s comments come on the back of the government’s recent introduction of draft legislation to the Commons enabling the introduction of permanently lower business rates for high street businesses from 2026, which it says would be “funded by a tax rise for the very largest business properties, such as online sales warehouses”. 

The proposal is for a higher rate (or multiplier) to be payable by businesses occupying property with a rateable value over £500,000.

According to James Murray, Exchequer Secretary to the Treasury, the move would give the retail, hospitality, and leisure sectors “much-needed certainty and support” thanks to a higher tax on the most valuable 1% of business properties.

The Budget also slashed business rates relief for retail, hospitality and leisure from 75% to 40%, effective for a year from April 2025.

But Colliers said the impact of this proposed legislation, if introduced, would enable the government to increase the higher multiplier (the rate at which property businesses are taxed) by up to 10p in the pound on these businesses with RVs above £500,000.

Colliers estimates that should this occur, larger stores could see rises of over £87.2 million and retail warehouses by £37.5 million.

Webber added: “The Government has not thought this policy through properly. Hammering the bigger businesses across the UK with such rates rises, on top of all the other costs inflicted on them in the Budget will not stimulate growth and investment. Rather the opposite.

“And putting further costs on the bigger retailers and hospitality businesses who actually create the employment opportunities in the sector will just misfire. There will be no incentives to expand, and increased costs will most likely be put through to the consumer. Jobs may be cut. I fail to see how the high street will benefit.”

He added: “By introducing additional multipliers we have an even more confused system and one where some sectors could well be seeing a tax rate of nearer 60p in the pound rather than 50p.”