1 April 2025: London’s West End is facing a major challenge – a proposed business rates hike of up to 20% that could stifle investment, impact jobs, and hurt our world-renowned retail, hospitality, and leisure businesses.

The Government’s current plans to reduce the business rate burden for smaller businesses and target online retailers could significantly impact London’s iconic West End. From April 2026, a new higher rate for all businesses with a rateable property value of over £500,000 will be introduced, disproportionately affecting businesses in the West End.

Backed by our latest research, we are urging the Government to delay this poorly assessed policy, conduct a full impact assessment, and explore the idea of a new ‘Combined Business Rate’ that will help to protect high streets and city centres while ensuring online retailers contribute their fair share.

Our latest findings show that just 0.8% of UK businesses will bear the £2.2 billion business rate hike, with 44% of them based in London. Nearly 2,000 businesses in Westminster – many within the retail, hospitality and leisure sectors that are already operating on tight margins – will be hit hardest, stifling investment, employment, and growth.

Devised by local Government finance experts, HOLBA is proposing a new approach, which would see tax collected directly from online sales in addition to bricks and mortar businesses. This new ‘Combined Business Rate’ would introduce a digital element to business rates, generating an estimated £6 billion from 2% of all online sales in the UK (with some exemptions), reducing business rates charged on bricks and mortar businesses by up to 37%.

Ros Morgan, Chief Executive, Heart of London Business Alliance said:

“The Government has not shared an assessment of the likely impact on businesses from their proposed policy which is why we commissioned our own research by local government finance experts. This led us to develop a very credible alternative on behalf of our members.

“If the Government proceeds with its proposed changes – the impact on operating costs for many of our member businesses in the West End will be truly shocking. The business rate system was implemented before the rise of the digital economy, and it needs to catch up. Successive Governments have tried and failed to reform business rates, but we believe that our idea for a new Combined Business Rate would widen the tax base, create a more inclusive and equitable system, potentially produce more tax for the Exchequer and reduce the unfair burden on certain sectors of the economy.

“Many of our members who will be affected by the Government’s proposed tax rise are retail, hospitality and leisure businesses – the majority of whom are currently operating on wafer thin margins. The cumulative impact of these cost rises is already stifling investment, employment and growth which could be very damaging in the long term for our area of the West End that is worth over £10 billion annually to the UK’s economy.

“We urge the Government to drop their plans to reform business rates and consider our proposals instead.”

John Dickie, Chief Executive of BusinessLDN, said:

“The Government’s commitment to transforming business rates, including to support the retail, leisure and hospitality sectors, is laudable. But these new findings demonstrate that the proposed reforms would lead to firms in the capital shouldering more than their fair share of the burden. The Government should now conduct a full impact assessment and reconsider its proposals to ensure they achieve their stated objective without placing a disproportionate burden on the London economy, which is vital for the UK’s growth.”

Neil Dolan, Managing Director of Little Lion Entertainment which operates the visitor attraction The Crystal Maze LIVE Experience said:  

“The Government’s commitment to reforming the business rates system was initially welcomed by businesses in the Experience Economy sector but this sentiment soon soured upon the presentation of the hastily pulled together proposals.  

“Many businesses in this sector need properties with a large footprint to accommodate fun, memorable and often unique experiences for customers in central London, whilst keeping prices affordable. It is clear from HOLBA’s report that these business rate changes would disproportionately impact businesses like ours within London’s West End. This would be a further critical blow to an already overburdened sector, which is still reeling from the recent budget announcements and the impact to consumer confidence due to the prolonged cost of living crisis. 

“This anti-growth approach only further dissuades businesses from feeling confident in investing or seeking expansion within the UK and will ultimately continue to limit the overall growth of the UK’s economy. If the Government is seeking to protect our city centres and high streets, it should consider a more targeted approach towards those businesses whose growth comes purely from online sales, rather than from those who are investing in our cities and workforce. 

“We’ll be working closely with HOLBA to call on the Government to publish an impact assessment of their proposals, acknowledge the damage it will do, particularly to the West End, and consider adopting HOLBA’s alternative approach that will protect UK businesses whilst ensuring that those who solely rely on an online presence pay their fair share.” 

Contact our Head of Public Affairs, Antonia Stratford on antonia@holba.london to get involved with this campaign.