Why business rates are failing for investors, and how reforming them could be the answer

Commercial property tax systems that provide stability and predictability are crucial to unlocking long-term private investment in critical infrastructure. Yet under the current business rates framework, particularly for assets valued using the Receipts and Expenditure (R&E) methodology, investors face rising volatility, limited transparency, and liabilities that often diverge sharply from underlying economic realities. These structural flaws undermine the very sectors the Government relies upon to deliver connectivity, productivity and regional growth. 

UK airports and private rail concessions demonstrate the scale of the challenge across all infrastructure assets with their long payback periods demanding clarity over future operating costs. In contrast, current business rates introduce uncertainty that raises the cost of capital and weakens investment cases. For example, airports struggle to pass through large or unexpected increases in liabilities, leaving regional and low‑cost airports especially exposed. Similar pressures are now emerging across rail concessions, where rate increases appear disconnected from performance or passenger demand. The result is delayed or curtailed investment programmes at precisely the moment when the Government is championing growth, capacity expansion and levelling up. 

This inconsistency highlights a deeper problem: business rates do not align with the core principles of an effective commercial property tax regime. To support long‑term capital formation, such a system must deliver stability, proportionality, objectivity and coherence with wider policy aims. Investors need multi‑decade visibility over potential liabilities, a tax structure that reflects economic performance, and a valuation approach that minimises subjective inputs.  

Above all, fiscal frameworks must reinforce, not undermine, national infrastructure and regional development strategies—benchmarks which R&E methodologies frequently fail against. Stakeholders across aviation, rail and other sectors report outcomes that diverge sharply from similar infrastructure classes, signalling deeper inconsistencies in the method’s application. This volatility discourages investment, delays essential upgrades, and ultimately weakens the wider economic ecosystems that depend on high‑quality transport links. 

Fortunately, a practical and proportionate solution is available: administering a revenue-linked cap, limiting Rateable Value to 10% of revenue, and calibrating to EBITDA margins would provide a clear guardrail to the R&E methodology, ensuring valuations remain anchored to economic reality. Complementary administrative improvements, such as stronger Pre‑List Discussions, clearer forward guidance, and durable principles governing the cap, would further enhance stability without adding burden. 

Taken together, these reforms would restore predictability, lower the cost of capital, and support the Government’s growth mission. A revenue‑linked cap is not only deliverable—it is essential to ensuring the UK remains an attractive destination for long‑term global infrastructure investment.