PolicyLens

Methodology note

Abolish rates for high-street firms: calculation note

Scenario assumptions behind the Abolish rates for high-street firms estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Abolish rates for high-street firms

Central fiscal result

+GBP 2.5bn - Net fiscal impact in 2028-29

Low case: +GBP 0.8bn. High case: +GBP 6.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model rates abolition for qualifying high-street firms by 2028-29.
  • Central case assumes GBP 2.5bn net annual relief.
  • Baseline uses business-rates receipts and existing reliefs.
  • No replacement online tax is included centrally.

Affected population

  • Affected population is business premises, not companies or workers.
  • Direct exposure includes shops, pubs, cafes and local services.
  • Indirect exposure includes landlords, councils and consumers.
  • Existing small-business relief reduces additional gains for some premises.

Gross impact

  • Central relief cost: about GBP 3bn gross.
  • Offsetting tax receipts from fewer closures: GBP 0.5bn.
  • High case assumes broad eligibility and weak offsets.
  • No dynamic town-centre uplift is scored.

Fiscal build-up, central case

  • Lost business-rates revenue: +GBP 3.0bn
  • Higher receipts from surviving firms: -GBP 0.4bn
  • Administration and boundary policing: +GBP 0.1bn
  • Local funding adjustment: -GBP 0.2bn

Central net impact: +GBP 2.5bn in 2028-29.

Behaviour and pass-through

  • Low case assumes narrow eligibility and strong existing relief overlap.
  • Central case assumes targeted retail, hospitality and local-service relief.
  • High case assumes broad premises coverage and landlord capture.
  • Price pass-through to consumers is uncertain and not fiscal-scored.
  • Business survival effects are treated cautiously.

Phasing

  • 2026-27: +GBP 0.5bn. Preparation or partial implementation.
  • 2027-28: +GBP 1.8bn. Main ramp-up year.
  • 2028-29: +GBP 2.5bn. Target-year central estimate.
  • 2029-30: +GBP 2.5bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • con-high-streets-2026: Conservative high-streets page; used for high-street business-rates pledge.
  • business-rates-2026: Business-rates forecast; rates receipts and reliefs baseline.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • hmrc-ready-2025: HMRC tax ready reckoners; main tax-cost anchor.
  • mirrlees-2011: Tax design principles; informs behavioural and incidence assumptions.
  • saez-slemrod-giertz-2012: Taxable-income responses; informs behavioural and incidence assumptions.