Key facts
- A coalition of UK business organizations, the Real Rates Reform Alliance, is advocating for business rates reform.
- The alliance proposes a 2% levy on online sales to fund a 37% reduction in business rates for physical premises.
- Research indicates that 47% of businesses have experienced an increase in their business rates since April 2026.
- Nearly one in three businesses have increased prices for customers as a direct response to higher business rates.
- Almost one in five businesses have delayed investment, and 17% have reduced staff numbers due to business rates.
A new coalition of business organizations, the Real Rates Reform Alliance, has launched a campaign to overhaul the UK's business rates system, arguing it is unsustainable and damaging to high streets. The alliance, chaired by Ros Morgan, CEO of the Heart of London Business Alliance, includes prominent groups such as UKHospitality, the Institute of Directors, and the British Independent Retailers Association. They are urging the Labour party to fulfill its manifesto promise to reform business rates and create a more level playing field between online retailers and physical businesses.
Research commissioned by the Heart of London Business Alliance from Savanta reveals the significant economic impact of the current system. Nearly half of businesses surveyed reported an increase in their business rates since April 2026, with only one in ten seeing a decrease. More than half of businesses consider business rates a major or moderate cost, leading many to pass on these costs to consumers through price hikes. Specifically, 31% of businesses have raised prices, 19% have delayed investment, and 17% have reduced staff numbers as a direct consequence of escalating business rates.
The alliance's proposed solution is a hybrid business rate system. This would involve implementing a small levy of 2% on all online sales. The revenue generated would then be used to fund a substantial 37% reduction in business rates for businesses operating from physical premises. This measure is intended to provide a significant boost to high streets and local communities across the country. The alliance also noted that figures like Andy Burnham have acknowledged the current system's unfairness, particularly concerning businesses like pubs, and they aim to build on this recognition to achieve lasting reform.