Lubbock Fine calls for business rates overhaul with profit-based tax

Lubbock Fine has urged the government to replace the business rates system with a local supplement tax on profits.

The UK government is currently consulting on a series of reforms to the business rates system, which include the introduction of a new five-tier multiplier structure from 1 April 2026. 

These proposals aim to provide permanent support for the high street by lowering rates for retail, hospitality, and leisure (RHL) properties with rateable values under £500,000, funded by a higher multiplier on large distribution warehouses.

In its response to the government’s consultation on business rates, which closes today, 18 February 2026, the firm argues that the current property-value-based model is an “anachronistic” barrier to economic growth.

The firm is calling for the entire system to be scrapped and replaced with a local supplement tax on profits.

Alex Altmann, a partner at Lubbock Fine, stated that the current system disproportionately affects sectors with tight margins, such as hospitality.  

The firm also highlighted the administrative burden of the existing regime, noting that the system generates an average of 122,000 first-stage appeals and 28,000 full disputes annually. 

This level of litigation, the firm claims, demonstrates that the system is “fundamentally flawed” rather than in need of the minor tweaks currently being proposed.

Additionally, under the current model, local authorities have no direct incentive to attract profitable businesses, as rates are not linked to company performance. 

Altmann noted that switching to a profit-based supplement would better align local government revenue with regional economic success and remove the risk of tax hikes for businesses that invest in improving their premises.

Altmann said: “Swapping business rates for a local tax on profits would create a fair and predictable tax system. It would support businesses as they go through their early unprofitable launch or growth stage and automatically become less of a burden when a business or a sector is struggling.

“Pubs are a clear example of how unfair the system has become. Many are viable community businesses but operate on tight margins, yet they are hit with tax bills that take no account of profitability. A local supplement tax on profits would be far fairer and far more supportive of growth. If the government is serious about boosting investment and simplifying tax, this consultation must lead to genuine reform.”