More than 200 employers have written to the Chancellor, John Healey, calling for an overhaul of business rates at his Budget on 28 October, proposing a 2 per cent levy on online sales to fund a 37 per cent cut in rates for businesses with physical premises.
The letter, organised by the Real Rates Reform Alliance, says the current system places a “disproportionate burden” on businesses that invest in communities and is holding back investment, jobs and growth. Signatories range from hotelier Sir Rocco Forte and the bosses of jeweller Boodles and The Ritz London to galleries, nurseries, cafes, independent shops and business improvement districts across the UK.
They argue that successive governments’ piecemeal approach of sector reliefs and exemptions has produced a system that “picks winners and losers without ever fixing the underlying problem”.
The alliance’s Hybrid Business Rate would combine a lower property-based business rate with a levy on eligible online sales. According to the letter, broadening the tax base in this way would raise enough to cut business rates by up to 37 per cent while maintaining funding for local government, with exemptions designed to protect small businesses.
In its published proposal, Heart of London Business Alliance, a founding member of the alliance, says the online element would be assessed and collected through the VAT system and could be introduced from 2027.
The letter acknowledges the Prime Minister’s decision to cut business rates for pubs, clubs and live music venues. Andy Burnham has pledged a 20 per cent cut for pubs, clubs and music venues.
The signatories wrote: “However, while this decision recognises some of the inadequacies within the current business rates system, it is not the fundamental change required to fix this broken system once and for all.”
Rachel Reeves, Healey’s predecessor as Chancellor, had pledged to level the playing field between the high street and online rivals. The letter urges Healey to consider “a fundamental reset, of the sort Labour promised in opposition”. It cites figures showing almost 13,000 shops closed in 2024, around 37 every day.
Forte, chairman of Rocco Forte Hotels, said: “Hotels are facing average business rates increases of 115 per cent over the next three years, a level that will be unsustainable for some and will inevitably kill investment and jobs.
“We need fundamental reform, not another round of piecemeal reliefs for a few sectors. The hybrid business rate offers a practical way to create a fairer system which ensures online businesses make their contribution and reduces the burden on businesses that invest in physical premises.”
Michael Wainwright, managing director of Boodles, a family-owned jeweller for six generations, said: “Businesses that invest in bricks and mortar, employ people and contribute to the life of our high streets should not carry a disproportionate share of the tax burden simply because they have physical premises.”
Ros Morgan, chairman of the Real Rates Reform Alliance, said: “Decades of piecemeal reliefs have failed to fix the underlying problem. The Government now has an opportunity to deliver fundamental reform rather than simply move the burden between sectors.”
Helen Swaby, chief executive of Clarendon Fine Art, which has more than 90 galleries, said business rates were “a significant and unavoidable cost”.
Anda Rowland, director of Anderson & Sheppard, tailors to the King, said: “Business rates are not an abstract tax for a business like ours.”
She added: “We employ highly skilled people and invest in training the next generation of craftspeople, but every increase in the cost of our premises puts greater pressure on our ability to invest in those people and in the future of the business.”
The letter arrives as Healey is reported to be considering changes to small business rates relief at the Budget. The Times has also reported that he plans to make online marketplaces collect sellers’ VAT, with the proceeds expected to fund business rates cuts for high street shops.
The signatories conclude: “We call on you to seize this opportunity to create a business tax system that is simpler, fairer, more sustainable, and better aligned with the economy of the future.”
The letter in full
Dear Chancellor,
Across the UK, too many towns and cities are being held back from realising their economic potential.
In 2024 alone, almost 13,000 shops closed (around 37 every day), as rising costs continued to outpace growth.
Businesses that invest in communities create jobs, drive productivity and sustain local economies, yet the current business rates system places a disproportionate burden on those businesses, while an increasing share of economic activity now takes place online without making a proportional contribution to the tax base.
Against this backdrop, we welcomed the recent announcement by the Prime Minister to cut business rates for pubs, clubs and live music venues.
However, while this decision recognises some of the inadequacies within the current business rates system, it is not the fundamental change required to fix this broken system once and for all.
We believe this moment now presents a unique opportunity to go further and create a business tax system that fixes the current regime’s fundamental imbalances, support firms across all sectors and drive investment in communities and long-term economic growth.
For more than two decades, governments of all colours have sought to reform business rates through new reliefs, exemptions and differential multipliers for individual sectors.
While often well-intentioned, this piecemeal approach has produced an excessively complex set of reliefs and special provisions that picks winners and losers without ever fixing the underlying problem.
The result is a fundamentally flawed system that is harder to understand, less economically rational and increasingly disconnected from the way the modern economy operates.
The next phase of business rates reform should build upon sector-specific interventions and modernise the system itself. The tax system should better reflect where economic activity takes place.
We therefore urge you to consider a fundamental reset, of the sort Labour promised in opposition.
We believe the Hybrid Business Rate is the comprehensive reform that this moment requires.
It combines a lower property-based business rate with a modest levy on eligible online sales across the economy.
The levy would be collected through the existing tax system, using an established administrative mechanism that minimises additional costs for businesses and government.
Broadening the tax base in this way would generate sufficient revenue to reduce business rates by up to 37 per cent, while maintaining sustainable funding for local government.
Carefully designed exemptions would ensure that the levy applies only to eligible online sales, protects small businesses and continues to support investment in physical places and experiences.
A Hybrid Business Rate is more than a reform of business rates. It is a modern fiscal framework designed for today’s economy, one that supports investment and provides combined authorities with a broader and more resilient tax base to underpin devolution, infrastructure, and long-term place-based growth.
Britain has spent three decades adjusting business rates instead of resolving their fundamental flaws. The time has come to modernise this broken system.
We call on you to seize this opportunity to create a business tax system that is simpler, fairer, more sustainable, and better aligned with the economy of the future.
The signatories
- Ros Morgan, Chief Executive, HOLBA
- Allen Simpson, Chief Executive, UKHospitality
- Jonathan Geldart, Director General, Institute of Directors
- Ojay McDonald, Chief Executive, ATCM
- Andrew Goodacre, CEO, BIRA
- Sir Rocco Forte, Chairman, Rocco Forte Hotels
- Mark Davyd, Founder & CEO, Music Venue Trust
- John James, Director, Soho Estates Limited
- Adam Powell, Managing Partner, Sally Adams Ltd
- Paul Hewitt, Director General, The Society of London Art Dealers
- Jonny Noble, Chief Executive, Bradford BID
- Penny Horner, Trustee, Jermyn Street Theatre
- James Potter, Director, The Greengrocery Yorkshire
- Simon Thomas, Executive Chairman, Hippodrome Casino
- Glyn Roberts, Chief Executive, Retail NI
- Andrew Douglas, BID Manager, Swansea BID
- Tracey Palmer, Manager & Company Secretary, Walton-on-Thames BID
- Stephanie Kerr, Chief Executive, BID Leamington
- Charles Begley, Chief Executive, London Property Alliance
- Emma Riley, Director, The Art Agency
- Eve Stafford & Elizabeth Simpson, Directors, Folies Lingerie
- Lia Bellanca, Director, Moonflower Cobham
- Andrew Hobbs, Director, Jeremy Hobbs Menswear
- Phensiri Koraveja, Owner, Lanthong Thai Restaurant
- Keith Brown, Owner, Figleaf Limited
- Gary Rea, Director, The Studios
- Pauline Rider, Chelmsford Markets & Shopmobility Manager, Chelmsford City Council
- Richard Harvie, Director, Harvie & Hudson
- Jeanne Bluett-Duncan, Managing Director, Art of Living Cook Shop
- Giles Semper, Executive Director, Opportunity Kensington
- Chris McCracken, Managing Director, Linen Quarter BID
- Aoife Loughran, Workplace Health and Wellbeing Coordinator, NI Chest, Heart & Stroke
- Paula Kearney, Director & Solicitor, Kearney Sefton Solicitors
- Stuart Lochhead, Owner & Director, Stuart Lochhead Limited
- Sasha Gomeniuk, Senior Director, Hales London
- Amanda Wilkinson, Owner & Director, Amanda Wilkinson Gallery
- Georgie Shields, Founding Director, Everard Read London
- Rebecca & Vincent Eames, Directors, Eames Fine Art Gallery
- Jamie Anderson, Director, Portland Gallery
- Verity Brown, Gallery Manager, Ordovas Ltd
- Ben Elwes, Director, Ben Elwes Fine Art
- Lorenzo Ronchini, Owner & Director, Avantgary Gallery Ltd
- John Martin, Founder & Director, John Martin Gallery
- James Mayor, Executive Director, The Mayor Gallery Ltd
- Alistair Oates, Managing Director, VacatAd Ltd
- Edmondo di Robilant, Founder, Robilant Gallery
- Bev King, CEO, Z Hotels
- Claude Abi-Gerges, Managing Director, Capital Arches Group Ltd
- Phil Clapp, Chief Executive, UK Cinema Association
- William Differ, Chief Operating Officer, Delfont Mackintosh Theatres
- Adam Wiles, London Estate Director, Gascoyne London
- Chris Gregory, Founder & Director, Heartflood Ltd
- Jason Maxwell, CEO, Harrogate BID
- Emily Gibbon, BID Manager, Gloucester BID
- Sharron Appleby, Chief Executive, Sunderland BID
- Cherry Shine, Managing Director, Wolverhampton BID
- Andy Evans, Owner, Pack Wolverhampton
- Edward Johnson, General Manager, Great Western Wolverhampton
- Diane Jarvis, Chief Executive, Sheffield BID
- Timothy Millard, Director, The Posada Manesh
- Joshi, Owner, Level Up Bar
- Satwinder M Singh, Owner, Fast Food Wolverhampton
- Mohammed Khan, Owner, Bilash
- Ash Raju, Board Member, McDonald’s Franchise Wolverhampton
- Soyful Amin, Director, Dilshad Indian Restaurant
- Darren Bunting, Owner, O’Rileys Live Music Venue
- Daniel Lloyd, Director, The Railway Inn
- Stephen Jones, Owner, Revenge
- James Heath, Company Director, Marprof Environmental Ltd
- Jonathan Kane, CEO, Kane International Ltd
- Simon Guilfoyle, Director, Ace 365 IT
- David Wood, CEO, Promenade Music Ltd
- Mubarak Patel, Director, Retail Shop Morecambe
- Nigel Leinweber, Director, Homemakers 1st Stop
- Mary Simpson, Director, Dance and Leisurewear
- David Worsfold, Director, T. Wiseman Ltd/ Farrants
- Annoushka Ducas, Founder, Annoushka
- Gavin Rankin, Managing Director, Bellamy’s Restaurant
- Joanna Hansford, Managing Director, Jo Hansford
- Lalage Beaumont, Founder & CEO, Lalage Beaumont Ltd
- Archie Hewlett, CEO, Duke + Dexter
- Mats Klingberg, Founder & Managing Director, Trunk Clothiers
- Taj Phull, Managing Director, Huntsman Savile Row
- Sacha Zackariya, CEO, The ChangeGroup International Plc
- Joanne Rees, Managing Director, Elizabeth Gage Ltd
- Susannah Lovis, Owner, Susannah Lovis Ltd
- Marina Wallrock, Director, Bayertree Ltd
- Jeremy Morris, Owner, David Morris International
- Steve Bent, Founder, The Ruze
- Jasmin Harsono, Founder, Emerald and Tiger
- Stephen Webster, Founder, Stephen Webster Ltd
- Charles Lea, CEO, Lea & Sandeman Co Ltd
- Sheherazade Goldsmith, Founder & CEO, Loquet London
- Julian Moore, Managing Director, D.R. Harris & Co Ltd
- Christopher Donaldson, Owner, CD & RD Bar Ltd
- Henry Deakin, Managing Director, Deakin & Francis Ltd
- Andrew Murphy OBE, Group CEO, The Entertainer
- Hilary Margaretta Freeman, Managing Director, Edward Green & Co Ltd
- Andrew Hinds, Chairman, F. Hinds
- Brian Lishak, Director & Company Secretary, Richard Anderson Ltd
- Gill Haigh, Managing Director, Cumbria Tourism
- Christopher Turner, Director of Research, British BIDs
- Serena von der Heyde, Director, Victorian House Hotel
- Franck Arnold, Managing Director & Regional VP, The Savoy
- Anda Rowland, Director, Anderson & Sheppard
- Robert Richardson FIH MI Hon Dlitt, CEO, Institute of Hospitality
- Trevor Pickett, CEO, Pickett
- Hamilton Gaul, Director, Bulldog Estates
- Joe Harris, Director, TLG Management
- Mike Sadler, Director, APML Estate Limited
- Emma Willis MBE, Founder and MD, Style for Soldiers
- John McKee, Director, Hanover Healthfoods
- George Somlo, Director, Somlo Antiques
- Adrian Sargent, CFO, Goodwood Estate Company Ltd
- Peter Williams, Director, Bohemian Wolverhampton Ltd
- Gemma Jane Talbot, Director, The Irish Wolf & Harp Ltd
- Michael Wainwright, Chairman, Boodles
- Forogh Rahmani, Director, Local London
- Nick Bond, Director, Franchetti Bond (London) Ltd
- Emma Jane Knight, Managing & Creative Director, EmmaJane Knight London
- Noll Uloth, Owner, Cordings Ltd
- Felix Parker, Founding Director, Fairfax & Favour
- Andrew Stephen Richardson, CEO, Home House
- Stephen Murphy, Chairman, Budd (Shirt Makers) Ltd
- Helen Swaby, Founder & CEO, Clarendon Fine Art
- John Burns, Director, Bloc
- Adrian North, Managing Director, The British Emporium
- William Skinner, Managing Director, Dege & Skinner
- Rufus Maurice, Director, The Cornish Bank
- Onur Ozbal, CEO, Cold Stone Creamery
- Scott Chester, Operations Director, Strongarm Hospitality
- J Littlewood, Director, Eric’s Café
- Stephen Pellegrini, Business Owner, Pelle Pub Co LLP
- Chris Taylor-Hone, Owner, Rendezvous Bars
- Laura Domville Powney, Director, Briggs Shoes Ltd
- Dizzy Dawson, Director, BVA
- Ranjit Mathrani, Chairman, MW Eat Ltd
- Julian Shaw, Director, BAFTA 195 Piccadilly
- Krishma Dear, Director, Edwardian
- Matt Mason, Partner, Crosstree
- Matthew Sims, CEO, Croydon BID
- Arpita Patel, Optometrist, Brompton Opticians
- Simon Carter, CEO, Simon Carter Ltd
- Theo Fennell, Owner, Theo Fennell Ltd
- Alistair Subba Row, Executive Chairman, Farebrother
- Prudence Freeman, Founder, Daisy Green Food Ltd
- Nick McKeogh, Co-Founder & Chief Executive, NLA
- Andrew Michael Love, Senior Advisor, The Ritz London
- Mark Fuller, CEO, Sanctum Hotels
- Alistair Thompson, Director, Spirit Bar Ltd
- Jason Gerrard, Managing Director, Gieves & Hawkes
- Sera Edmunds, Owner & Manager, Andrew Edmunds Restaurant
- Jamie Alexander Poulton, Director, Randall & Aubin
- Gemma Martinez, Company Director, Bonadea Ltd
- Rupert Power, Managing Director, Sophie’s Steakhouse
- Jackie Clode-Dickens, Marketing Consultant, DVO Group Ltd
- Sally Gillborn, CEO, North Notts BID
- Alicia Cooper, Director, AMC Morecambe Ltd
- Catherine Mitton, Founder, The Governance Geek
- Graham Andrew Hodgson, Director, The Cobblestones
- Michelle Beazley, Director, SKLTN Events Ltd
- Mike Truelove, CEO, Hereford BID Ltd
- Jill Farnsworth, Chief Executive, MyMiltonKeynes BID
- Louise Baxter, BID Manager, Harrow BID
- Nick Bishop, Business Manager, The Bath Business District
- Joe Harrison, Chief Executive, NMTF Ltd
- Nicola Grant, Executive Director, Positively Putney BID
- Alexa Volker, BID Manager, Reading BID
- Stephen Manion & Gemma Pratt, Executive & Deputy Director, GO! Southampton
- Mandy White, Director, Altrincham BID Ltd
- Karen Burton, BID Manager, Bishop’s Stortford BID
- Livia Caruso, BID Director, Hammersmith BID
- Michael Ansell, Director, Rock Wolves Ltd
- Mark Price, Company Director, Northstreet Barbers Ltd
- Nicola Wheeler, CEO, InExeter
- Joanne Glover, CEO, Coventry BID
- Claire Fuller, Finance & Operations Director, Davies Property Partners
- Sophie Laciofano, Company Director, Cobham Clinic
- Carol Edwards, Managing Director, The Wine Reserve
- Prue Barker, Managing Director, Evie Loves Toast Ltd
- Zoe Elizabeth Foster, Owner, Moo Moo’s Play Café
- John Jones, Managing Partner, Philip Morris & Son
- Surinder Josan, Owner, All Seasons DIY
- Karen Forret, Managing Director, Wilkies
- Michael Hughes, Director, Tom Hughes
- Nathan Gale, Director, Gardner & Scardifield
- Martin Coles-Evans, Managing Director, Hargreaves & Son
- Sadie Chalkley, Director, Banfield and Sons
- Matt Renaut, Managing Director, Dacombes
- Mike Rice, CEO, Balfe’s Bikes
- Jonathan Harrison, Director, Association of Cycle Traders
- Bryan Wheatley, National Operations Manager, MICA Hardware
- Steve Jones, Managing Director, Sirius Buying Group
- Julia Carrick, Founder & CEO, Julia Carrick Luxury
- Andrew Ross, Owner, Suttles of Malden
- Adamson Harper, Director, Harper Ltd
- Charlotte Claire Dimpfl, Head Teacher & Owner, Tadpoles Nursery School
- Leighton de Burca FIPM, Place Making Director, Placemaking Bristol
- Alistair Mann, Board Member, One Cobham
