From your local pub to where you get your hair cut, high streets are not only the foundation of local economies, but represent the heart of local communities too.

For too long though, the business rates system has been working against high streets’ success – leaving them disadvantaged in their competition with online and out-of-town alternatives.

We have used our time in opposition and in government to listen to businesses from across the country, and they have said time and again their number one ask is stability.

That is why, last week, we have taken a critical step that will permanently level the playing field between high streets and their competitors.

Legislation introduced to the Commons last Wednesday will enable us to introduce a new, permanent tax cut for retail, hospitality, and leisure properties that make up the backbone of our high streets.

This cut will be sustainably funded, not by increasing taxes on working people, but through a higher tax rate on the most valuable 1% of business properties in the country.

Shifting retail’s tax burden

This will capture the majority of large distribution warehouses, including those used by online giants, as well as other out-of-town businesses that draw footfall away from high streets.

This not only shifts the tax burden away from the high street, but will help make sure online giants pay a fairer share.

These new, permanently lower tax rates will provide stability too, after the chronic uncertainty of the previous government’s one-year retail, hospitality, and leisure relief, which has been extended year-by-year since the pandemic.

The approach we inherited from the last administration has been holding back investment by creating a cliff-edge for businesses, whilst representing an unsustainable fiscal pressure.

Our new, lower tax rates, which are sustainably funded, will provide retail, hospitality, and leisure businesses with much-needed certainty and support. They will protect high streets and the public finances, whilst giving businesses stable foundations on which to grow.

Unlike the cash-capped retail, hospitality, and leisure relief provided by the previous government, these new lower tax rates will provide meaningful support to over 99% of retail, hospitality, and leisure properties.

We will be setting out the full details of the tax cut at next year’s budget, so that we can factor in the outcomes of the upcoming business rates revaluation and broader economic and fiscal context.

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In the meanwhile, to provide businesses with the support they need to ensure a smooth transition to the new system, we are extending the existing relief for retail, hospitality and leisure properties for next year at 40% up to a cash cap of £110,000 per business.

We are protecting small properties from the effects of inflation by freezing the small business multiplier next year too. Together with small business rates relief, this means over a million properties will be protected from inflationary bill increases.

These changes begin our work to reform business rates and make sure they support growth.

Alongside what we announced at the budget, we published a discussion paper on Transforming Business Rates, setting out our priority areas for further reform and asking businesses to work with us to design a fairer system for the future.

We recognise that it is businesses who face these challenges every day, so we are inviting them to help develop our plans to remove barriers to investment, tackle empty properties, and make the system more responsive to changes in the market.

This is a government that is delivering the stability that businesses have long been calling for. We are delivering the stability businesses need to invest for the long-term with confidence, and that we all need to make sure businesses can create wealth and opportunity for people across the country.

 

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