The government’s expanded Supporting Small Business (SSB) scheme will only delay, rather than prevent, a looming business rates crisis for hospitality and retail, with hundreds of venues at risk of closure from next year, according to a leading property specialist.
Andrea Barnes, head of business rates at Form Property, said the retail, hospitality and leisure (RHL) sector is already “on life support” as firms brace for a combination of reduced reliefs, higher multipliers and rising rateable values.
“In recent years, many businesses have absorbed the loss of vital retail and hospitality relief, previously worth 75 per cent but cut to 40 per cent from April 2025,” Barnes said. “Add the fixing of multipliers at a minimum of 0.38 and the impact of the 2026 revaluation, and the numbers quickly become unworkable.”
She warned that for a typical independent pub or restaurant, business rates bills are set to rise by an average of £8,000 to £10,000 a year from April 2026, with some facing even steeper increases. “That is enough to wipe out margins that are already razor-thin,” she said.
Barnes pointed to modelling from UKHospitality, which suggests that around six pubs, restaurants, hotels and other hospitality venues could be forced to close every day once the new measures take effect, unless ministers deliver further sector-wide support.
She noted that when Labour entered office in July 2024, it pledged to address long-standing unfairness in the business rates system and revive the high street — a commitment welcomed by bricks-and-mortar businesses that have long argued they are penalised simply for occupying physical space.
“For years, physical retailers and hospitality operators have paid heavily just to exist on the high street, while many online businesses with far higher turnovers have faced a much lighter rates burden,” Barnes said. “That imbalance has accelerated the decline of town centres across the country.”
The government’s October 2024 Budget appeared to signal meaningful reform, with ministers announcing plans to replace the two-multiplier system with five new business rates multipliers from April 2026. Properties with rateable values below £500,000 were promised lower multipliers, around five pence in the pound below the national rate, with larger properties paying more.
“On paper, it sounded like progress,” Barnes said. “In reality, for many RHL businesses, it risks becoming a hammer blow.”
From April 2026, the expanded Supporting Small Business scheme will cap annual increases for firms losing some or all of their relief, limiting rises to between 5 per cent and 30 per cent depending on bill size, or £800 – whichever is greater. Barnes acknowledged that the scheme would soften the immediate impact and help cash flow in the first year.
“But let’s be clear,” she said. “The SSB scheme only prolongs the agony, it does not solve the underlying problem.”
She gave the example of a high-street pub or restaurant whose rateable value rises from £55,000 to £100,000. Without relief, a 0.38 multiplier would produce an annual rates bill of £38,000 for the same premises and turnover. While the SSB cap might limit the first-year increase to around £4,500, bringing the bill to roughly £28,000 to £29,000, the cost would then climb year after year towards the full amount.
“For many independents, that trajectory is simply unsustainable,” Barnes said.
She warned that unless the government intervenes quickly, including halting increases and actively reducing rates for the most vulnerable sectors, viable businesses will be priced off the high street.
“The warning signs are already flashing,” she said. “The question now is whether the government listens, or whether the UK pays the price in more boarded-up pubs, empty restaurants and hollowed-out town centres.
“The Supporting Small Business scheme buys time, but it does little to support long-term survival or future growth. Once these businesses are gone, they will not come back.”
