AUTUMN BUDGET: “RETAILERS – REVIEW YOUR RATEABLE VALUE NOW TO UNLOCK THE HEADROOM TO GROW”

British retailers went into the 2026 Autumn Budget looking for support amid cautious consumer spending and squeezed margins. Raising the Small Business Rate Relief threshold to £18,000 offers some relief for retail, hospitality, and leisure businesses, but it’s still a challenging climate.

Graeme Donnelly, CEO and founder of company formation agent 1st Formations, comments on the impact of the Chancellor’s announcements, highlighting the need for sustained cost relief and a stable policy environment to give retailers the confidence to invest, recruit and grow over the long term.

• The positive takes: Raising the Small Business Rate Relief threshold will ease property costs for smaller retailers and give high street shops greater scope to invest and grow
• The wider cost burden: Employment costs and taxation continue to threaten the sector disproportionately, with retailers paying the equivalent of 72p in business taxes for every £1 of pre-tax profit
• Advice for retail business owners: Review your premises’ rateable value now and check whether it falls within the new £18,000 threshold, then identify how any savings could be reinvested in the business when it applies next year

“Since the change of leadership this summer, SMEs have been watching closely to see whether Andy Burnham’s government can create the environment needed for them to thrive. Retailers are facing rising costs and cautious shoppers, and uncertainty hasn’t helped. The British Retail Consortium recently reported that total retail sales grew by just 1.3% year-on-year in September.

“Today’s rates announcement delivers part of what retailers were hoping for, but its impact will depend on whether it gives them the financial headroom and confidence to invest, recruit, and grow once it is in place.

“The cumulative burden of taxation remains a significant concern. According to BRC analysis, retailers pay the equivalent of 72p in business taxes for every £1 of pre-tax profit, compared with an average of 50p across 11 major sectors. The BRC also estimates that increases to employer National Insurance contributions and the National Living Wage have added £6.5 billion to retailers’ employment costs over two years. The Chancellor didn’t take up calls to lift the £5,000 employer National Insurance threshold, which remains frozen until 2031, and with the National Living Wage rising 3.9% to £13.20 from April 2027, payroll costs will keep climbing. The Government’s decision to further simplify to corporate reporting and reduce red tape is also a welcome reprieve for many SMEs, which rarely have a finance or compliance team to absorb that burden.

“The decision to raise the Small Business Rate Relief threshold is the measure that matters most for the high street. The Federation of Small Businesses had called for the threshold to rise from £12,000 to £25,000, which it estimated would exempt at least 250,000 more small businesses from rates. The Chancellor’s £18,000 falls short of that, but John Healey says it will take an estimated 70,000 more retail, hospitality, and leisure businesses out of business rates altogether, meaning around half of shops, restaurants, and gyms will pay nothing. Building on the Government’s 20% business rates cut for pubs, social clubs, and live music venues from April 2027, today’s measure provides further support for small independents such as high street stores.

“To make the most of the changes, my advice to retail, hospitality and leisure business owners is simple: review your premises’ rateable value without delay and check whether it falls within the new £18,000 threshold. And if you’re considering moving from an online shop onto the high street, start making these calculations from the day you view your premises. It’s also worth reviewing your biggest fixed expenses and considering how any savings from the measures announced could be reinvested in the business to support future growth, recruitment or expansion.

“The common thread is making it easier and more affordable to run a business. The Autumn Budget has addressed some of the immediate cost pressures facing smaller businesses, while wider reporting reforms could reduce the administrative burden. But alongside immediate cost relief, businesses need a stable, predictable policy environment to plan for the long term. This will be essential to supporting employment, strengthening high streets, and enabling retailers to contribute to economic growth.”