Business rates reforms announced in the recent Budget have sparked widespread controversy as major retailers are set to benefit from tax cuts while smaller hospitality venues face significant increases. Analysis by tax experts reveals that iconic London department stores, including Harrods and Selfridges, will see substantial reductions in their property tax bills over the next year. Harrods, located in Knightsbridge, is expected to receive a £1.1 million decrease, while Selfridges on Oxford Street is set for a cut of £622,000.

These cuts come as a result of a change in the “multiplier,” a key factor used to calculate business rates. From next year, large properties will be charged a lower multiplier, effectively reducing their tax burden. While the Chancellor has hailed these reforms as delivering “permanently lower tax rates for more than 750,000 retail, hospitality and leisure properties,” industry groups have condemned the measures for their uneven impact across sectors.

Trade bodies representing smaller hospitality businesses warn that pubs, restaurants, and coastal hotels will be disproportionately affected. UK Hospitality chair Kate Nicholls described the situation as “outrageous,” expressing concern that local venues, which are already under financial pressure, are facing “eye-watering” rate increases. She cautioned that the hikes risk leading to further closures and job losses across the hospitality sector.

Similarly, leaders from pub chains conveyed deep worries about the measures. Organised by the British Beer and Pub Association, a letter from publicans highlighted that some establishments could see their business rates rise by as much as £16,952 over the next three years. They warn that these increases threaten the viability of many pubs, potentially resulting in “sleepless nights, pay cuts and staff layoffs.”

The Budget reforms come amid the Chancellor’s broader push to stimulate economic growth in retail and hospitality by lowering tax rates to their lowest level since 1991. However, the results of the policy appear uneven across different types of businesses, with high-end retail properties benefiting from reductions while smaller, independent operators bear increased financial burdens. This disparity has ignited calls for the government to reconsider the rates structure to ensure fair treatment and support for smaller businesses struggling to recover.