What the Autumn Budget means for retail

Chancellor Rachel Reeves has confirmed she will introduce permanently lower business rates for the retail, hospitality and leisure sector, unveiling a package aimed at relieving pressure on high streets and rebalancing competition with online rivals.

The measures come after concerns from businesses have intensified since March. Following tax rises in April, the sector’s capacity to absorb additional operating costs is said to have "narrowed sharply".

Addressing business rates in today's Budget, the Chancellor said: "To support our high streets, I am announcing a package of three changes, as called for by UK Hospitality and the British Retail Consortium."

Reeves confirmed that she will introduce permanently lower tax rates for more than 750,000 retail, leisure, and hospitality properties - what she described as "the lowest rates since 1991". The reductions will be funded through higher rates on properties worth more than £500,000, which she said includes the large warehouses used by online giants.

As a result, Reeves announced a support fund for qualifying properties that will see larger increases to help them to transition.

Commenting on this, Helen Dickinson, Chief Executive Officer at the British Retail Consortium, said: "Retailers face a delicate balancing act as they strive to invest, hire, and keep prices affordable.

"The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation."

Michael Shapiro, commercial property partner at law firm Spencer West LLP, added: "Despite lowering business rates for many retail and hospitality businesses through higher rates on warehouses used by online retail companies, the fact remains that the local high street has many empty retail and hospitality premises.

"While an overhaul is scheduled for April 2026, this is something that needs to be addressed with urgency. Hospitality, leisure and retail businesses continue to struggle through the current system, which is further compounded by the rise in National Insurance in the last Budget and the incoming rise to the minimum wage in January.

"The domino effect of this on retail and hospitality workers, builders, and tradespeople cannot be underestimated, and the impact is clear to see by walking along any high street."

As part of her plans to "support a level playing field in retail", Reeves also said she will ensure customs duty applies to parcels of any value, stopping online firms from undercutting high street businesses.

It follows reports earlier in the week suggesting the Chancellor may not scrap the UK "de minimis" loophole until 2029, despite mounting pressure from British retailers. No timeframe for the change was mentioned in today's speech. 

The existing exemption has long faced criticism for giving fast-growing e-commerce giants such as Shein and Temu an unfair advantage. Major UK businesses - including Primark owner Associated British Foods, NEXT, and the British Retail Consortium - say the rule distorts competition, undermines high streets and deters investment.

Retail leaders insist reform "cannot come soon enough", warning that volumes of non-compliant goods entering the UK are accelerating.

Mairéad Warren de Burca, Managing Director at Alvarez & Marsal Tax, commented: "As expected, Rachel Reeves has confirmed plans to remove the low-value import threshold - though the timing remains unclear, with previous signals suggesting a phased approach or full implementation by 2029.

"At present, goods imported from countries like China with a value under £135 are exempt from import duty. This has benefited fast-growing online retailers such as Temu and Shein, which ship large volumes of low-cost products directly to UK consumers.

"Removing the exemption may have a direct impact on prices. The measure is intended to level the playing field for domestic retailers competing with overseas e-commerce platforms, but it will inevitably add to consumer costs and increase administrative burdens for importers."

Dickinson added: "While we welcome the decision by the Chancellor to close the de minimis loophole, the proposed timeframe is simply too long. There are 1.6 million parcels arriving in the UK every day, double what they were last year, and businesses cannot afford any delay on scrapping the existing rules.

"The US has already removed its threshold, with the EU following suit next year; the Chancellor must take decisive action and remove the exemption as fast as possible. This will help protect British consumers from the risks of imported goods that don’t meet the UK’s stringent environmental and ethical standards, while promoting fairer competition."

Elsewhere in the Budget, Reeves confirmed that capital gains tax relief on business sales to employee ownership trusts will be reduced from 100% to 50%. She also emphasised that millions of workers will receive a pay rise next year as minimum wage rates increase.

From next April, the National Living Wage for workers aged 21+ will rise 4.1% to £12.71 an hour, boosting annual full-time earnings by £900. Around 2.4 million low-paid workers will benefit.

Meanwhile, the National Minimum Wage for 18-20-year-olds will rise 8.5% to £10.85,  increasing annual earnings by £1,500, and the rate for 16-17-year-olds and apprentices will rise 6% to £8 an hour.

The increases will benefit a total of 2.7 million young and older workers, the Government previously said, adding that by seeking expert and independent advice, it was able to ensure the right balance is struck between the needs of workers, business affordability, and employment opportunities.

Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce, responded: "People are at the heart of every thriving business, and employers want to ensure their workforce is happy, engaged and well paid. However, every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for individuals."

Reeves also confirmed that training for under-25 apprenticeships will be "completely free for small and medium-sized enterprises", with new Government funding provided to remove training costs.

Concluding her Budget, the Chancellor said she has "built our economic resilience for the future", telling MPs: "This Labour Government is changing our country... Those are my choices. Not austerity, not reckless borrowing, but cutting the debt, cutting waiting lists, cutting the cost of living. Those are the Labour choices. Promised and delivered by this Government."

Reflecting on the Budget, Retail Trust CEO Chris Brook-Carter, said: "It remains to be seen whether today’s Budget will do enough to reassure the UK retail industry days ahead of the busiest shopping period of the year and amidst the ongoing uncertainty currently facing the sector from all sides.

"Retail is the largest employer outside of the public sector, is a gateway to work for many people, and binds our communities and high streets together. This is something we forget at our peril, and our concern is that job insecurity among employees could rise and that shoppers’ tensions will remain heightened over the coming months. The industry needs more support from the Government but it’s also on all of us to support staff and help bring respect back to the high street this Christmas when we’re out shopping."

Also speaking in response to the Budget, Victoria Brownlie, Chief Policy & Sustainability Officer at the British Beauty Council, said: "There are things to like and challenge in this Autumn’s Budget, but the work starts now for the Council in engaging with the Department for Business & Trade, Treasury and the Department for Education to determine the detail of these measures in relation to our sector.

"As ever, we remain committed to ensuring the beauty industry’s voice is both heard and valued in ongoing policy discussions.”