Reeves set to scale back business rates plans for large retailers
Retailers currently pay about 20% of the total business rates bill, which brings in around £30bn each year for the Treasury
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Chancellor Rachel Reeves is reportedly planning to scale back plans to raise business rates on big retailers after warnings it could push up food prices, according to the Financial Times.
The news comes after the Treasury had planned to put properties worth more than £500,000 into the highest tax band from April 2026, to help fund discounts for smaller shops, pubs and restaurants. Ministers said the change would only affect the largest 1% of properties and would also bring in big online warehouses, such as those owned by Amazon.
But supermarkets and other major retailers said the extra costs would make some stores unprofitable and add to pressures from higher wages, packaging taxes and employer national insurance. The British Retail Consortium (BRC) warned that up to 400 stores could close.
After a recent meeting with supermarket bosses, the FT learnt that the Treasury officials signalled the government is considering taking large retailers out of the top tax bracket. One official said the sector had “been listened to”, but stressed no final decision had been made before the November Budget.
Retailers currently pay about 20% of the total business rates bill, which brings in around £30bn each year for the Treasury.
Food and drink prices were 5.1% higher in August than a year earlier, compared with overall inflation of 3.8%. Analysts expect food inflation to rise to 6% by the end of the year, which could affect the Bank of England’s decision on interest rates.
Labour leader Sir Keir Starmer admitted at the party’s conference that the government had “asked a lot” of business.
Reeves has also said she “recognises the concerns of larger supermarkets, but stressed her priority is protecting smaller high street firms”.
One retail executive told the Financial Times: “It would be very welcome if the Treasury backed down, but it would just be correcting a wrong rather than any new relief. We can only hope that if we are given this, we won’t be hit in other ways in the Budget.”
In a statement to the FT, a Treasury spokesperson added: “We do not comment on speculation around future changes to tax policy.”
