West End businesses propose new business rates, call for impact assessment

New research by the Heart of London Business Alliance (HOLBA) has suggested that property occupiers in London could see business rates increase by up to 20 percent under the government’s incoming business rates relief structure. The organisation, which represents businesses across three districts in London, has thus offered an alternative to mitigate impact.

Beginning April 2026, the government is planning to implement business rates relief for retail, hospitality and leisure businesses with rateable property values of under 500,000 pounds to be funded by higher rates from businesses occupying properties with a rateable value of over 500,000 pounds. HOLBA points out, however, that this will significantly increase business rates bills for the nearly 2,000 businesses in Westminster with a rateable value of over 500,000 pounds.

In a release, chief executive of HOLBA, Ros Morgan, noted that the government has not shared an assessment of the potential impact on businesses for the proposed policy, leading the organisation to conduct its own research on the matter. With this, Morgan expressed the “truly shocking” impact on operating costs many HOLBA members operating in the West End may face, while further highlighting the lack of consideration for the digital economy, which Morgan noted had expanded after the implementation of the business rate system.

HOLBA calls for consideration of digital companies to address disproportion

As such, HOLBA stated that the current set up for business rates “disproportionately disadvantages high street businesses located in areas of high value”. Alternatively, digital companies that require physical spaces do not have to be in areas of high land values and therefore “tend to pay significantly less in business rates” than retail, hospitality and leisure companies of a similar scale.

HOLBA is therefore proposing a Combined Business Rate composed of two elements. The first, the Property Business Rate, would reset rates to just one multiplier at 34.8 pence, cutting all business rates bills of 37 percent for businesses with standard multipliers and 31 percent for those with the small business multiplier. The Digital Business Rate, meanwhile, would be levied on all online sales in the UK, with the exception of certain firms, alternating from previous proposals that have focused only on online retail sales.

Morgan continued: “Successive governments have tried and failed to reform business rates, but we believe that our idea for a new Combined Business Rate would widen the tax base, create a more inclusive and equitable system, potentially produce more tax for the Exchequer and reduce the unfair burden on certain sectors of the economy. Many of our members who will be affected by the government’s proposed tax rise are retail, hospitality and leisure businesses – the majority of whom are currently operating on wafer thin margins.

“The cumulative impact of these cost rises is already stifling investment, employment and growth which could be very damaging in the long term for our area of the West End that is worth over 10 billion pounds annually to the UK’s economy. We urge the government to drop their plans to reform business rates and consider our proposals instead.”