Chancellor Rachel Reeves is said to be poised to bow to pressure to exempt all shops from a proposed higher band of business rates.
Officials have reportedly said the Treasury is working to exclude retail from a proposed higher rate for larger properties from 2026.
It follows a meeting last month between Reeves and retail chiefs over the issue.
Legislation passed earlier this year enables Reeves to use her autumn budget to increase business rates for properties with a rateable value over £500,000. The extra tax raised is to be used to fund a business rates discount for smaller retail, hospitality and leisure premises with a rateable value below £500,000.
The BRC has been campaigning for all shops to be exempt to the higher rate, and recently warned 400 large stores were at risk of closure if the government did not listen.
A Treasury official said the sector had “been listened to”, according to the Financial Times. Discussions are said to be ongoing ahead of the budget in November, with a final decision yet to be taken.
The BRC also recently called for the Treasury to go ahead with the proposed discount for smaller shops without charging larger shops to fund it. The plans could remain revenue neutral by making the proposed higher rate “slightly” more for large properties outside retail, such as office blocks, it argued.
Treasury minister James Murray used a column in The Grocer to set out the plans in September last year. “This not only shifts the tax burden away from the high street, but will help make sure online giants pay a fairer share,” he said.
The Treasury has said the higher rate will affect less than 1% of the most valuable business properties.
However, major retailers warned it would harm smaller higher street businesses by driving out large shops that act as anchor tenants, drawing footfall.
In evidence submitted to the Treasury in December, M&S said 21% of its stores in England were over the £500k threshold, and one in three of those were in high street locations. “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,” the retailer said.
“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores.”
Retail accounts for 5% of the economy while paying over 20% of the total £30bn annual business rates bill, according to the BRC.
A Treasury spokesperson said: “We do not comment on speculation around future changes to tax policy.”
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