The 2024 Autumn Budget has been watched with close scrutiny by those in the retail and leisure sector and for good reason, the sector has long been subject to excessive business rate burdens. Whilst there remain concerns for some over the coming year, the changes announced today are largely welcomed.
Retailers currently contribute 7.4% of all business rates whilst only representing a 5% share of the economy's GDP. Taxes consume 55% of industry profits with 11% of this derived from business rates alone. With finite Covid-era reliefs currently suppressing an otherwise potentially overwhelming tax burden, pre-budget fears were that the position could become un-tenable for many businesses within the sector.
The announcement in today's budget that two new, lower, long-term tax rates will be introduced in 2026, comes as a relief, signifying recognition that the current pressures are unsustainable. In line with manifesto pledges to raise the same revenue in a fairer way, the government are taking steps to reform the balance of business rates. The question now becomes whether this action will be adequate and swift enough to support the retail and leisure sector.
Fears have also been particularly prominent with regard to the pandemic-era 75% relief scheme on business rates, scheduled to end in April 2025. The chancellor announced today that in order to reduce the danger of this cliff edge, an extension of the scheme at a lower, 40% relief will be introduced from April 2025 until 2026 for retail, hospitality and leisure sectors. Whilst potentially preventing a calamitous situation, this reduction in relief may still raise concerns for many who will see a doubling in business rates over the next year.
Other areas of the budget were less positive, with the 1.2% rise in employers' national insurance acting as a source of concern for retail, leisure and hospitality businesses as some of the largest collective employers in the country.
In summary, the Autumn Budget suggests a positive long-term approach to current issues with an overhaul of business rates for the sector in 2026 providing highly sought after change. The budget has also highlighted the long-term difficulties facing these sectors, which remain important forces for driving growth. Moving forward, the government must continue to take measures to ease ongoing pressures.
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