Thousands of small businesses in the hospitality and retail sectors will see their business rates eliminated under a recent budget, a move welcomed by industry leaders as the first positive step in years. However, many businesses argue that further action is urgently needed to combat mounting operational costs.
The Chancellor has raised the threshold for Small Business Rates Relief from £12,000 to £18,000. This change, effective from next April, means approximately 70,000 small firms, including cafes, pubs, and salons, will no longer pay business rates if their property's rateable value is up to £18,000. A tapering system will apply for values slightly above this threshold.
Larger businesses will also benefit from a real-terms freeze on their bills for the next two years. This means that instead of potentially facing increases of up to 25% compounded with inflation, these firms will only see costs rise in line with inflation.
The government intends to fund these reliefs by increasing gambling duties and by requiring online marketplaces like Amazon and eBay to ensure sellers are remitting VAT.
Allen Simpson, chief executive of UKHospitality, described the budget as the "first Budget in several years to deliver any positive news for hospitality." He noted that previous budgets had imposed significant cost increases through business rates, wages, and National Insurance contributions.
Despite the positive measures, Simpson stressed that there remains "a hill to climb" and urged the government to "go further, faster" in addressing the sector's tax burden to stimulate economic growth and job creation.
Ros Morgan, chair of the Real Rates Reform Alliance, expressed a similar sentiment, stating that the business rates relief for smaller companies amounts to "tinkering around the edges of a broken system." She argued that the current system penalizes businesses for investing, creating jobs, and driving growth.
Former restaurateur Hugh Osmond suggested that the rates relief would be insufficient to offset the impact of rising wages, energy, and food costs on businesses.
Pub industry leaders also voiced concerns. Nick Mackenzie, chief executive of Greene King, called the budget a "missed opportunity," asserting that increases in employment costs and a rise in beer duty would negate any benefits from a previously announced 20% cut in business rates.
The British Retail Consortium (BRC), representing major retailers, stated that the Chancellor had failed to deliver the promised "breathing space" for shops, noting that 120,000 retail jobs have been lost in the past two years. BRC chief executive Helen Dickinson characterized the business rates announcement as "smoke and mirrors," pointing out that retailers would still face a 3.5% increase in bills, which she described as "another body blow to high streets already struggling."