Rachel Reeves' Tax Plans Could Further Diminish Britain's High Streets

Rachel Reeves, the Chancellor, is reportedly considering a significant increase in business rates that would impose a £1.7 billion burden on retailers, potentially putting more stress on Britain's struggling high streets. Since her appointment, Reeves has already raised employer National Insurance contributions, which has adversely affected the retail sector. Now, in her autumn Budget, she is expected to impose additional taxes aimed at department stores and supermarkets to address what the Treasury claims is a £5 billion shortfall in public funds. This anticipated increase comes as shoppers witness many beloved brands shuttering their stores this year.

Retailers are not passively accepting the proposed changes; leading the opposition is Marks and Spencer, which, alongside other giants such as Asda, Morrisons, Primark, Sainsbury's, Tesco, and Kingfisher, is voicing strong objections to the new rates. M&S has cautioned that higher taxes could result in the closure of 111 branches. In documentation provided to Angela Rayner's department, responsible for business rates, M&S emphasized that taxing larger retailers could be detrimental to smaller businesses, stating that should larger stores close, it would lead to further difficulties for smaller shops. They warn that the proposed changes might accelerate the ongoing decline of high streets by pushing larger retailers out of the market.

This new taxation plan could impact nearly 17,000 business premises and extend its effects beyond traditional high street stores to include hotels, restaurants, cinemas, and breweries. Business rates are calculated based on a property’s rateable value, an estimate made by the Valuation Office Agency regarding the rental cost for the property as of April 1, 2021. John Webber, a business rates expert from Colliers, expressed disbelief at how the government's strategy would foster growth if it resulted in diminished investment and employment opportunities in major high street outlets. In response, a Treasury spokesperson mentioned plans to implement lower permanent tax rates for retail, hospitality, and leisure venues from the following year, suggesting these changes aim to support the high street and sustain jobs within beloved retail chains.