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

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