Colliers – business rates changes constitute a dismal day for UK PLC and the high street: John Webber, head of business rates at Colliers, has said the government’s announcements concerning business rates constitute a “dismal day for UK PLC and the high street”. He said: “Together with rises anticipated in the 2026 Revaluation, matters have been made even more costly for businesses, who overall will be facing higher bills next April as business rates are set to rise from £33.6bn to £37.1bn – a 10.2% increase. This is despite pre-election promises of business rates reform and ‘saving the high street’.” Yesterday the chancellor announced the abolition of the 40% business rates relief for the retail/leisure sector (which had been capped at £110,000 per business) from next April. This will now be zero. Its new multiplier policy with the introduction of five new business rates multipliers. Webber said: “The government stated that the reason for the lowest multiplier for the smaller retail, hospitality and leisure (RHL) properties is to compensate them from the loss of their RHL reliefs and to put support for the ‘high street’ on a permanent footing. However, the funding for this reduction is to be achieved by increasing the multiplier for larger properties – those with rateable values (RV) of £500,000 and above – across all sectors, including retail, hospitality and leisure.” The government said that over 750,000 properties will be due to benefit from the RHL multipliers and just over 21,000 properties would be in scope for the higher multiplier on 1 April 2026. It did admit however that because property values are generally higher in London and the south east, most of the properties in scope of the higher multiplier will be in these areas. Webber said: “Whilst we are pleased to see that the cap on support for RHL operators has now been removed (previously £110,000 per business) we are concerned that the discount on the smaller multiplier is only 5p which is limited and may not offset the loss of reliefs these smaller shops and restaurants received previously, particularly if their RV rise as anticipated in the 2026 Revaluation. We are also disappointed that the government has continued with its plan that the funding for this reduction will be achieved by increasing the multiplier for larger properties – those with RVs of £500,000 and above – across all sectors. This will impact offices, large industrial and manufacturing units and larger retail sites among others – putting millions on their bills. This policy is also an attack on London and the south east. By its own admission, of the 21,000 properties paying the higher multiplier – 10,700 are in London and the south east. The government has also said that its policy is to target the large distribution warehouses, yet of the 21,000 businesses facing the higher multiplier only 1,900 are distribution warehouses, and a fraction are online retailers. By this action the government has effectively shifted the cost of this support to the RHL sector from itself to UK plc, putting an even further strain on businesses across the board – and putting even further pressure on the high street since it is the big retail and leisure operators who provide anchor tenants, encourage footfall and create the jobs. Such increased costs are effectively a stealth tax and will only lead to food inflation. This will do nothing to stimulate investment and expansion. Far from reducing business rates – they are on the way up.”

 

Businesses expected to pass on costs of pension raid to staff: Employers will pass on the cost of a £4.7bn tax raid on pension contributions to their workers with lower wages and less generous schemes, Rachel Reeves has been warned. A cap of £2,000 per year is set to be imposed on the amount employees can put towards their retirement under a company salary sacrifice scheme before they face an extra levy. Above the threshold, national insurance will be charged at a rate of 8% for basic rate taxpayers and 2% for higher one. Employers will pay an extra 15% – the full amount of National Insurance paid on salaries – with the changes due to take effect from April 2029. The move was one of Reeves’s biggest revenue generators and is expected to raise £4.7bn, according to the Office for Budget Responsibility. However, The Times reports that the watchdog said it assumed the vast majority of the cost, 76%, would likely be passed on by businesses to their employees. It estimated that half this amount would be reflected in companies offering their workers less generous employer contributions, and the other half would be made up for in “lower salaries and bonuses”. For a worker on £70,000 making a 6% salary sacrifice to their pension worth £4,200 per year, estimates suggest they would face a reduction in take-home pay of £44 in employee national insurance contributions. The employer would also face an additional £330 levy, according to modelling of the policy by the investment platform AJ Bell. The pension change will “add significant cost to employing staff”, warned Alice Jeffries, head of tax policy at the Confederation of British Industry (CBI). She said: “Businesses have already described this policy as a ‘tax on doing the right thing’, with recent CBI survey data further showing that three in four employers will have to decrease pension contributions as a result. Ultimately this unwise move will only damage growth, investment and pension saving rates.”