60,000 shops in the UK may close: what threatens small businesses.

The closure of small shops in the UK

According to The Sun: Co-op warned that up to 60,000 small shops in the UK could close if business tax reforms for small traders are not implemented.

In the autumn 2024 budget, Chancellor Rachel Reeves promised to introduce permanent tax discounts for small retailers.

The government also plans to raise tax rates for larger retailers with income over £500,000 to provide discounts for small shops and food establishments.

Although new rates have yet to be set, changes are planned to take effect from April 2026.

Co-op urges the government to ensure maximum discounts for small shops in the upcoming autumn budget, scheduled for November 24.

A study conducted by the supermarket chain showed that one in eight small shop owners could go bankrupt if reforms are not implemented. Another 10% of small businesses reported that they would be forced to cut staff.

“The proposed system will improve the financial situation for 99% of retailers. How they will be protected from tax increases depends on the decisions made in this budget. To boost local economies, create jobs, and ensure social cohesion, we need a growing business,” said Co-op CEO Shirin Khuri-Haq.

Shirin Khuri-Haq added that the government must take action to support small businesses in all communities — not just for survival but for growth.

Doubts among large retailers

At the same time, many large retailers have expressed concerns about plans to raise taxes for larger shops, claiming this could make them unprofitable or lead to price increases.

In August, a letter signed by Morrisons, Aldi, and JD Sports warned that further tax increases could undermine the Labour government's promise to ensure a “high standard of living”.

“As retailers, we have done everything possible to protect our customers from the worst inflationary pressures, but as these pressures continue, it becomes increasingly difficult to cope with the costs we face,” reads the letter.

Analysis by the British Retail Association also indicated that 400 large stores, such as department stores and supermarkets, could close if the proposed changes become a reality.

The Treasury expects the new rate system to affect only 1% of properties.

“We are creating a fairer tax system to protect small businesses and create conditions for investment,” noted a Treasury representative.

Prospects for retail in 2025

The British Retail Association predicted that an increase in tax rates for entrepreneurs would cost the industry £2.3 billion.

A study by the British Chambers of Commerce showed that more than half of companies plan to raise prices before the beginning of April.

• 55% of companies expect price increases in the next three months.
• About 17,350 retail locations may close this year.
• In 2024, 13,000 shops closed, a 28% increase compared to the previous year.

“The results of 2024 show that while the number of closures is not as high as in 2020 and 2022, the situation is still worrying, and this is not the end,” asserts Professor Joshua Bemfield.

He also warned of bleak prospects for 2025, predicting a loss of up to 202,000 jobs in the industry.