Hundreds of large-format retail stores across the UK could face closure if the government implements a proposed higher business rates surtax for properties with a rateable value exceeding £500,000.
New analysis from the British Retail Consortium (BRC) suggests that up to 400 such stores are at risk, with the potential loss of 100,000 jobs and a significant impact on local high streets.
Impact of Proposed Surtax on Large Stores
The BRC’s research focuses on a government proposal to introduce a higher business rates tax band affecting retail, hospitality and leisure (RHL) premises with high rateable values. The government intends to fund a permanent reduction in business rates for smaller RHL premises by introducing this surtax for large-format properties.
There are approximately 4,000 large-format retail stores in the UK with a rateable value over £500,000. These stores, which include supermarkets and department stores, already contribute around one third of the retail sector’s total business rates bill. Despite accounting for only 5% of the UK economy, the retail sector pays over 20% of the total business rates collected.
According to the BRC, many of these stores operate on narrow profit margins—typically 2% to 4% in food retail—and a rise in business rates could lead to cost-cutting measures including price increases, staff reductions or store closures.
Wider Effects on High Streets and Employment
If the surtax were applied to all qualifying large stores, the BRC estimates that up to 400 stores could close, potentially affecting around 100,000 jobs and reducing annual business rates income to local authorities by over £100 million.
Large-format stores are frequently described as anchor tenants in retail locations and can contribute to overall footfall in high streets and shopping centres.
Helen Dickinson, Chief Executive of the BRC, said:
“Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafés, restaurants and smaller and independent shops. After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities. 400 more large stores could disappear if the government forces them into its new higher tax band. This would mean up to 100,000 jobs lost, emptier high streets, and less revenue for the Exchequer.”
Call for Adjustment in Budget Planning
The BRC has called on the Chancellor to consider changes to the surtax as part of the Autumn Budget. It has proposed that large-format retail premises be excluded from the higher tax band and suggests instead adjusting business rates for other large commercial properties such as office buildings. The BRC argues that rates make up a smaller share of operating costs in those sectors and that the economic impact of any increase would be lower.
Implications for the Jewellery Industry
Jewellers operating within large-format stores or retail environments dependent on anchor tenants may be indirectly affected by any closures or reduction in footfall resulting from the proposed surtax. Businesses may need to review cost structures and customer engagement strategies in response to potential changes in the surrounding retail landscape. The Autumn Budget is likely to provide further clarity on how these proposals will be implemented.
