Business rates rise risk for high street shops, retailers warn

A business rates increase for high street shops would push up pressure on prices, the British Retail Consortium (BRC) has warned, days before Chancellor John Healey delivers his first Budget on Wednesday 28 October. No such rise has been announced. Sky News has reported that the Treasury will not bring in further taxes on large warehouses, although no Treasury statement confirms it.

For shoppers, the practical message is to treat this as a warning rather than a bill. Here is what is known, who could be affected, and what you can sensibly do before the Budget.

Budget business rates tax on high street shops: what is known

Business rates are the property tax paid by the occupier of a non-domestic building, and they are set separately in England, Scotland, Wales and Northern Ireland. The proposal retailers have been arguing against is a so-called warehouse tax. According to L’Express Franchise, citing Retail Gazette, no rate has been given and the report does not say which nations it would cover.

The BRC’s chief executive, Helen Dickinson, put the retailers’ case bluntly. She said: “The Chancellor cannot promise to ease the cost of living while piling more costs onto the retailers working to keep prices down.” She added that “another rise in business rates would push up pressure on prices, choke off high-street investment and put local jobs at risk.” Retailers have asked Mr Healey to exempt high street businesses from the highest business rates multiplier.

According to Retail Systems, the government had previously considered higher charges on warehouses and out-of-town retail developments to fund relief for pubs, restaurants and other high street venues. Retail Systems also reported that Prime Minister Andy Burnham had indicated that approach. Sky News reported that online retailers and large distribution centres will not now face extra warehouse taxes beyond existing changes. An HM Treasury spokesperson said the government wanted retailers to thrive, cited business rates cuts, a corporation tax cap and a £4.3 billion package to help businesses manage costs, and declined to comment on Budget speculation. Changes that took effect in April already raised rates on larger properties, including warehouses with rateable values above £500,000.

Retail business rates changes: who pays more, who pays less

The bill lands on the occupier of the building, so the businesses affected first are retailers with large sites. The John Lewis Partnership says it pays about £170 million a year in business rates, its largest tax expense and its second-largest cost after wages. Its chair, Jason Tarry, wrote in The Telegraph that the proposal reflected a “fundamental misunderstanding of how modern high streets work”.

The partnership says the April changes left more than 200 John Lewis and Waitrose shops facing higher charges, against 18 distribution centres, so that around 80% of the extra burden falls on shops. L’Express Franchise notes these are the partnership’s own figures, with no independent calculation or Treasury response quoted. Marks & Spencer chief executive Stuart Machin has also called for reform, saying retailers already carry a disproportionate share of the tax burden. He said M&S faced £150 million in additional annual costs following the government’s tax changes.

Shoppers do not pay business rates directly. Any effect would come indirectly, if retailers raise prices, cut investment or close stores. Mr Tarry argued that department stores and supermarkets act as anchor tenants whose footfall supports independent shops and cafés. The BRC-Sensormatic Footfall Monitor recorded a 2.9% fall in visits in the five weeks to 3 October, according to L’Express Franchise, so the pressure is arriving on a weak base.

Shop prices rising? What the latest figures show and a worked example

The BRC and KPMG said total retail sales grew 1.3% in the 12 months to September, below last year’s pace. The Evening Standard reported that this was also under the 12-month average of 1.5%. These are sales figures, not a price index, but they show how cautious shoppers already are.

Now an illustration, which is our own arithmetic and not a forecast. Suppose a household spends £100 a week on groceries and retailers passed on enough extra cost to lift shelf prices by 1%. That is £1 more a week, or £52 over a year. A 2% rise would mean £104 a year. None of the sources says prices would rise by any particular amount, so use these figures only to gauge what a rise of that size would cost you.

Barclays figures reported by the Evening Standard show why the Budget is on shoppers’ minds. Confidence in household finances reached a seven-month high of 67%, yet 68% of those polled were concerned about the Budget’s possible effect on their finances.

What to do now

First, wait for the detail. The Budget is on Wednesday 28 October, and until then the scope, rate and reach of any change to business rates on large premises remain unpublished, according to L’Express Franchise. Reports of a ruling-out come from Sky News, not from the Treasury, which declined to comment on speculation.

Second, be wary of Black Friday. KPMG’s Linda Ellett said: “With the Black Friday promotional period approaching, some consumers will inevitably be questioning whether today’s purchase might be cheaper tomorrow.” If a purchase is not urgent, comparing prices over the coming weeks costs nothing. Third, if you run a shop or other business premises, keep your current rates bill and rateable value to hand so you can check it against anything announced on the day.

Your questions answered

What are the new business rates for small businesses in 2026?

The sources for this story do not give small business rates, and no new rates for 2026 have been announced in them. They cover larger properties, noting that April changes raised charges for warehouses with rateable values above £500,000. Rates are set separately in each UK nation, so check the guidance for your own nation after the Budget.

What are the HMRC tax changes for 2026?

The sources do not set out a list of HMRC changes for 2026. The Treasury cited a corporation tax cap and business rates cuts in its response, and it declined to comment on speculation about the Budget. Any new measures would be expected on Wednesday 28 October.

Do all businesses need to pay business rates?

The sources describe business rates as a property tax paid by the occupier of a non-domestic building. They do not list who is exempt or who qualifies for relief. The government had considered funding relief for pubs, restaurants and other high street venues, but no decision has been published. Check your own position once the Budget details are out.