UKHospitality and the British Retail Consortium (BRC) are calling on the government to exempt hospitality and retail outlets from a planned business rates surcharge.
The rates surcharge would see 5,000 high street properties over £500,000 rateable value affected by a higher tax rate and could put 500 premises at risk of closure if applied, the trade bodies have warned.
The properties employ approximately 120,000 people and these jobs “would be impacted by any closures”, they added.
The government’s manifesto committed to reforming business rates and “levelling the playing field” for the high street.
However, the UKHospitality and the BRC have warned this “cannot be achieved if hospitality and retail businesses remain eligible for the surcharge and end up with higher rates bills, after decades of overpaying”.
UKHospitality chair Kate Nicholls argued that the hospitality sector is paying “three times more than its fair share” in business rates, and she has called on the government to “deliver in full” its pledge to level the playing field for the high street.
“That means implementing the maximum possible rates discount for properties below £500,000 rateable value, and exempting larger hospitality properties from the surcharge.
“Delivering both those measures is the only way to fulfil that commitment and prevent hospitality businesses from being taxed out,” Nicholls explained.
BRC chair Helen Dickinson added: “Thriving high streets depend on a vibrant mix of outlets – from shops and cafés to restaurants and entertainment venues. Large retailers are central to this ecosystem.”
Over the past year retailers have faced an additional £7bn in costs, according to the BRC, from changes including higher employer National Insurance contributions and new packaging taxes. Meanwhile, the hospitality sector has been hit by £3.4bn in annual cost increases since April.
Dickinson added: “Introducing a business rates surtax would only add to inflationary pressures, leading to store closures and job losses. We urge the Chancellor to exempt these businesses from the surtax, helping safeguard hundreds of anchor stores and the vital jobs they sustain.”
It comes as the Co-op warned earlier this month that more than 60,000 small shops and 150,000 jobs are at risk unless the government delivers business rates reform in full in the autumn budget. The convenience retailer is calling on Rachel Reeves to make full use of new powers to cut business rates for small shops from 2026.
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