M&S sounds alarm over Chancellor's proposed tax raid

Marks & Spencer has warned that 111 of its stores could be at risk of closure following Chancellor Rachel Reeves’s proposal to hike business rates on larger properties in the upcoming autumn Budget.

Reeves is plotting a £1.7 billion tax raid in the autumn, according to The Telegraph. Although the new rates have not yet been revealed, sources said that any surcharge on bigger properties will be set at the maximum possible.

The Government argues this shift is necessary to fund lower rates for smaller high street retailers, hospitality businesses and leisure venues. However, M&S chiefs emphasise that the measure could have the opposite effect.

"Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy - if larger shops close, smaller shops suffer," said M&S. The retailer predicts closures would accelerate the decline of town centres, particularly in regions like the West Midlands and North East, where youth unemployment is already high.

Experts agree. John Webber, Head of Business Rates at property firm Colliers, described the proposals as a misstep, stating it "beggars belief" to suggest punishing well known high street operators will help revive local retail, arguing such a move could deter investment and hinder job growth.

Ministers passed a bill in April that allows them to impose a "surcharge" of up to 10 pence per pound on properties with an annual rental value of £500,000 or more.

Business rates are based on a 'multiplier' system, which takes the estimated annual rental value of a property and multiplies it by a charge set by ministers. As it stands, the multiplier for premises with a rental value of more than £51,000 is 54.6 pence in the pound. Retailers are then given 40% off their bills, up to £110,000, under a relief which costs the exchequer £1.7 billion a year.

Kate Nicholls, the Chair of Hospitality UK, said that ministers must deliver the 20 pence discount in full or face "carnage on both on the high street and in retail".

"If they’re looking for more money, you cannot come back to the high street and have another bite at the cherry. If they do, they’ll tax us out of existence," she added.

The Chancellor’s rationale centres on offsetting cuts to Government spending by targeting large retail estates that would once have qualified for business rates relief. However, critics fear unintended consequences, such as increased prices and store closures, just as high streets attempt to recover.

M&S has joined forces with major retailers including Asda, Sainsbury’s, Tesco and Primark, urging the Government to reconsider before it cements what they see as a "stealth tax" that risks destabilising the very high streets it pledges to support.

A Treasury spokesman said: "We are a pro-business Government that is creating a fairer business rates system to protect the high street, support investment, and level the playing field.

"To deliver our manifesto pledge and provide certainty and support to the high street we intend to introduce permanently lower tax rates for retail, hospitality, and leisure properties from next year.

"Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, supporting some of Britain’s most loved high street chains to continue to create jobs and grow the economy."

As the autumn Budget looms, the spotlight is on Chancellor Reeves: will she listen to warnings that targeting retail giants could break rather than rebuild Britain’s high street?