BPF Spotlight Series: Business Rates

For our latest BPF Spotlight, we caught up with our Assistant Director of Policy Rachel Kelly to find out more about our latest business rates research. 

In the spotlight, Rachel discusses why we’ve done our research, what it explores and what the biggest surprises are. Read what she had to say below:

❓Why has the BPF researched business rates?

🗣️Despite numerous government reviews, none have explored the wider economic impact of high business rates. The UK has one of the highest property tax burdens in the OECD, with a 55p tax rate far exceeding other corporate taxes. Yet, the Government hasn’t asked what this means for growth and productivity. Our research aims to fill this gap, quantifying the effects of raising or lowering business rates on the economy.

❓What does the research explore?

🗣️In partnership with Avison Young and supported by ChamberlainWalker Economics, we analysed how changes in business rates impact output, productivity, tax revenues and jobs. The Government’s plan to fund tax cuts for retail, hospitality and leisure by increasing rates for properties over £500k will add £1.7bn to the tax burden, leading to £2.3bn in lost economic output, £1.5bn drop in productivity, £170m less in tax revenues and up to 22,000 jobs at risk

❓What were the biggest takeaways?

🗣️The impact on jobs stands out - cutting business rates could be a highly effective way to support employment. Our research shows that reducing business rates costs the public sector around £63,000 per job, compared to £70,000 under the 2023 ‘Back to Work’ Budget. Similarly, the Homes and Communities Agency (HCA) has historically been willing to pay up to £68,000 per job in interventions (adjusted for 2024/25 prices).

❓ What changes would best support the industry?

🗣️Business rates should be fair, sustainable and responsive to economic shifts. While there’s no single fix, three key reforms would make a big difference:

• Reduce and fix the tax rate.
• Increase the frequency of revaluations.
• Reform the empty property tax, extending relief to at least six months, ideally 12, to reflect real-world vacancy periods.