Primark's Warning: Tax Hikes Threaten to 'Anchor' High Streets

Primark's parent company, Associated British Foods (ABF), is sounding the alarm over the Labour government's proposed changes to business rates, warning the reforms could place immense financial strain on major retailers and jeopardize the future of Britain's high streets. The company's CEO, George Weston, has urged Chancellor Rachel Reeves to reconsider the plans ahead of the Autumn Budget on November 26.

The retail industry is bracing for a potential financial crisis as the government's rumored business rates surtax is set to take effect in April. The new policy, which aims to reduce costs for small businesses by increasing the tax burden on larger retail properties, is being met with fierce opposition. The British Retail Consortium (BRC) and tax experts warn that the changes, which target properties valued above £500,000, could destabilize up to 400 large-format stores.

According to industry analysis, approximately 363 major retail premises face a collective additional charge of £45 million annually. George Weston, the billionaire executive whose company owns the popular Primark chain, has publicly criticized the proposed alterations as "mistaken." He argues that large stores are essential to "anchor" high streets, and this new tax will undermine their ability to invest and support local economies.

This intervention comes at a precarious time for ABF. The company's recent trading update revealed that Primark's like-for-like sales are expected to decline by about 2% in the second half of 2025, with a 2.4% drop in the third quarter alone. While Primark's total sales are still projected to grow by 1% due to new store openings and a strong performance in the US, the negative like-for-like sales highlight a difficult trading environment. This is compounded by rising labor costs and new packaging taxes, which Weston has pointed to as existing pressures on the business.

Chancellor Rachel Reeves has stated that the Autumn Budget will focus on "delivering for working people, by prioritising renewal and growth through investment and reform." However, critics like tax consultancy leader Alex Probyn argue that the new business rates policy is a "stealth tax" that penalizes the very businesses that provide mass employment and support local economies. The government's plan to reduce the Retail, Hospitality and Leisure business rates relief from 75% to 40% for the 2025/26 tax year, with a £110,000 cap, is also expected to significantly increase costs for many businesses, both large and small.

As the retail sector faces a trifecta of declining sales, rising operating costs, and a new tax burden, the industry is united in its call for the government to reconsider its approach. The fate of hundreds of high street stores and the jobs they support now hangs in the balance as the Chancellor prepares her Budget.