Retail pays a fifth of the bill on 5% of the economy
Business rates are a tax on commercial property. A bill is the property’s rateable value, an estimate of its yearly rent, multiplied by a rate the government sets, known as the multiplier. Because the tax follows the building and not the takings, a shop can owe the same amount in a weak year as in a strong one.
Machin says retail makes up about 5% of the economy but pays more than a fifth of all business rates. Analysis by the British Retail Consortium (BRC) and UKHospitality found that retailers paid 72p in business taxes for every £1 of pre-tax profit in 2025-26, against an average of 50p across 11 sectors.
The large-store surcharge survives the warehouse U-turn
Since April, properties in England with a rateable value of £500,000 or more have paid a multiplier of 50.8p per £1, against 43p for mid-sized shops. That band covers large supermarkets, department stores and distribution centres. Retailers feared the Budget would bring more warehouses into a higher charge to pay for cuts elsewhere.
Healey ruled out the warehouse rise within days. The BRC still wants the large-store surcharge scrapped and rates frozen.
Small firms are first in line
Reports suggest Healey will raise the threshold below which properties pay no rates from £12,000 to £18,000, removing around 75,000 properties in England. The Treasury has declined to comment.
Profit warnings and slow sales narrow the margin for error
EY-Parthenon documented 65 profit warnings from UK-listed companies in the three months to September (the highest number since late 2024). More than a third of these companies noted the conflict in the Middle East as a reason.
UK retail sales grew by 1.3% in September, but non-food sales rose by just 0.3%. The British Retail Consortium (BRC) also reported that the retail sector had lost 122,000 jobs over the past two years.