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Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →UK retailers face pressure from two separate tax changes: higher employer National Insurance contributions (NICs), which took effect in April 2025, and a business-rates revaluation with new lower multipliers for eligible retail, hospitality and leisure properties (RHL), effective in England from April 2026. The impact varies by payroll, premises, relief eligibility and transition caps; the available figures do not measure one combined tax burden for retailers or show that these changes alone caused store closures.
Why retailers face pressure from two different tax changes
Employer NICs apply to payroll; business rates apply to occupied premises. They therefore affect businesses through different cost bases and on different timelines. A retailer with a large wage bill may feel the NIC changes most, while a business whose premises have seen a sharp rise in rateable value may face greater pressure from business rates.
The distinction matters when assessing claims about high-street costs. In a written question on 7 January 2026, Baroness Stedman-Scott asked what the government was doing to support high-street retailers facing rising costs, including employer NIC increases and the National Living Wage, and whether existing support was adequate to prevent further store closures. The question identifies concerns; it is not evidence that a particular tax change caused closures. The parliamentary question and answer describe a £4.3 billion, three-year support package for businesses facing revaluation bill increases, but do not assess whether it will prevent further closures.
How business rates are changing for shops in 2026
Business rates are calculated using a property’s rateable value and the applicable multiplier, with reliefs and transition arrangements affecting the final bill. In England, eligible RHL properties with a rateable value below £500,000 receive lower multipliers from 1 April 2026. The lower multiplier can reduce a bill relative to what it would otherwise have been, but it does not guarantee that the bill falls: a higher revalued rateable value or changed relief can outweigh the reduction.
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New lower multipliers for eligible properties
For 2026–27, qualifying RHL properties below £500,000 rateable value use a small-business multiplier of 38.2p or a standard multiplier of 43p. Each is 5p below the corresponding national equivalent. The government said these permanent lower rates would benefit more than 750,000 properties and be worth nearly £900 million a year. Eligibility and the applicable multiplier matter; the change should not be assumed to apply to every shop. The policy described in HM Treasury’s Budget 2025 is for England, and business-rates systems elsewhere in the UK may differ.
Why bills can rise despite a lower multiplier
The 2026 revaluation uses property values from 2024. When a shop’s rateable value rises, applying a lower multiplier does not necessarily produce a lower bill. Reliefs and transitional caps also affect what a ratepayer pays in a particular year, so a multiplier alone cannot predict the result.
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HM Treasury’s worked example illustrates the point: an independent shop with a rateable value rising from £30,000 to £39,000 goes from a bill of £8,982 in 2025–26 to £10,329 in 2026–27 after the example’s cap. Without the support package, the stated 2026–27 bill would be £14,898. These are figures in an official example, not an estimate for a typical shop. HM Treasury’s revaluation factsheet also gives a larger-property example: a rise in rateable value from £50,000 to £110,000 produces an after-cap bill of £19,461, compared with £47,300 before support.
What the business-rates receipt forecasts do—and do not—show
The Office for Budget Responsibility (OBR) forecast UK business-rates receipts of £34 billion, or 1.1% of GDP, in 2025–26, up 5.2% on 2024–25. It forecast £37 billion, or 1.2% of GDP, in 2026–27, up 10.0%. These are receipts across the tax, not the amount paid by retailers alone.
The OBR linked the 2025–26 increase to CPI-driven rises in the standard multiplier and less generous RHL reliefs than in 2024–25. For 2026–27, it cited the revaluation, inflation and a higher multiplier for high-value properties, partly offset by reliefs and bill caps. Its forecast is an aggregate fiscal measure, not a retailer-only account. See the OBR’s March 2026 Economic and Fiscal Outlook.
How the 2025–26 relief differs from the later changes
In 2025–26, eligible RHL properties had 40% business-rates relief, capped at £110,000 per business. That temporary relief is distinct from the lower multipliers introduced for eligible properties in 2026–27 and from transitional arrangements that limit some bill increases. HM Treasury’s November 2024 announcement describes the earlier relief.
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How much employer National Insurance can cost a retailer
From April 2025, the employer NIC rate rose from 13.8% to 15%, while the annual secondary threshold—the point above which employer NIC is due—fell from £9,100 to £5,000. Employment Allowance, which eligible employers can use to reduce their NIC bill, increased from £5,000 to £10,500. For a retailer, the net effect depends on its payroll and eligibility for the allowance; the changes apply to employers broadly, not retail alone.
The OBR’s October 2024 modelling estimated that 940,000 employers would lose overall from the package, 250,000 would gain and 820,000 would see no change. It also estimated an average annual increase of more than £800 per employee and around £26,000 for an employer that loses. These are modelled estimates for employers generally, not measured costs for retailers. They should not be treated as a bill forecast for an individual shop. The OBR’s October 2024 Economic and Fiscal Outlook sets out the estimates.
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How to assess the likely impact on a particular retailer
A useful comparison separates premises costs from payroll costs and uses actual business information rather than applying sector-wide figures to an individual case.
- Check the premises exposure. Identify the property’s current and revalued rateable value, whether it qualifies for the lower RHL multiplier, and which multiplier applies.
- Account for relief and timing. Compare the bill for each relevant year, including any relief that applied in the earlier year and any transitional cap or other relief affecting the later bill.
- Calculate payroll exposure separately. Use the employer’s wage bill and the NIC rate and threshold in force from April 2025, then account for Employment Allowance eligibility and use.
- Label the evidence. Distinguish an actual rates bill or payroll record from an official worked example, an OBR forecast or an estimate for employers generally.
- Check the jurisdiction. The lower multipliers described here are an England policy; do not assume the same business-rates rules apply across the whole UK.
What the available figures establish about pressure and closures
The figures establish that business-rates receipts were forecast to rise, that the employer NIC package changes costs for some employers, and that individual premises bills can move sharply when rateable values change. They do not establish a combined tax total for UK retailers or quantify how many shop closures were caused by these measures. A retailer’s exposure requires its own premises valuation, relief position and payroll figures; broader forecasts cannot substitute for them.
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