Tax timebomb poses existential threat to high streets, government warned

22 Jan 2026

Small businesses such as cafes, shops and hairdressers are facing three years of business rates misery with an average 52% hike in bills, analysis from the Federation of Small Businesses (FSB) has revealed.

This is due to the removal of business rates relief for 230,000 small firms across the retail, hospitality and leisure (RHL) sectors in England.

The removal of the relief, combined with other business rates changes being introduced by the government from this April, leaves many having to pay thousands of pounds extra, says the FSB.

In a letter to the government, the FSB has urged ministers to deploy the full relief available to them for small firms in RHL. Currently, only a quarter of the potential relief included in the government's own formula is being used.

FSB Policy Chair, Tina McKenzie, said: 'Striving small businesses in retail, hospitality and leisure – from bakeries and coffee shops to garden centres, gyms and dry cleaners – are on the brink unless Chancellor makes a decisive intervention now.

'The tax timebomb that's currently ticking will see three years of soaring bills, threatening our high streets and the jobs and services they provide.

'Combined with other cost pressures going up in April as well, the Chancellor has to be realistic that without action on business rates relief, the burden will become too much to bear for some, who will either shrink or close down altogether.'