In the wake of last week’s Budget announcement, uncertainty looms large over the retail sector as business rate reforms remain unclear.
M&S chief executive, Stuart Machin, expressed his disappointment following the recent Budget presentation, emphasising the lack of precise guidance regarding the modifications to business rates. The Chancellor’s decision to potentially lower business rates for retail, hospitality, and leisure sectors from 2026/27 was acknowledged, yet Machin noted the absence of actionable details and the postponement of significant reforms. Currently, the retail industry contributes 5% to the economy but bears the burden of 21% of the total rates. “We were hoping for some good news on business rates,” Machin stated, highlighting that last year alone, M&S paid £170 million in rates.
Moreover, Machin drew attention to the government’s neglect in addressing the apprenticeship levy reform, which he anticipated would be included in the recent announcements. Additionally, the impending escalation of Employers’ National Insurance Contributions came as a surprise to many in the sector. From April 2025, contributions will rise from 13.8% to 15%, with the salary threshold for these taxes reduced from £9,100 to £5,000. Such changes could potentially add an extra £60 million to M&S’s tax responsibilities. To contextualise, last year M&S faced a tax bill encompassing £180 million in national insurance, £170 million in business rates, and £180 million in corporation tax, totalling £460 million.
Further complicating the situation, the new Budget has instigated changes to inheritance tax relief on farms and agricultural properties valued over £1m. The modification, advocating a 50% relief instead of a full waiver from 2026, has unsettled many, including the National Farmers Union. President Tom Bradshaw commented on the ramifications for family-run farms, noting the potential for increased food production costs which cannot be absorbed by already strained farmers. Machin reiterated M&S’s commitment to support British farmers, recognising their challenging roles.
Despite these hurdles, M&S reported a boost in first-half profits, attributed to rising food sales, as the company sustains its strategy to be seen as a ‘most trusted retailer.’
Overall, the recent Budget announcements have introduced considerable uncertainty for retail and agricultural sectors, leaving significant stakeholders like M&S seeking clarity and reassurance in future reforms.
