Hundreds of pharmacies are facing closure because of soaring business rates, with owners warning that high taxes are forcing them to cut services for vulnerable patients.

Almost half of the 420 pharmacy owners surveyed by the National Pharmacy Association (NPA) said they were considering shutting down their practices because of higher business rates bills. The trade body found 55 per cent were considering moving to cheaper premises, raising fears that some rural and coastal communities could be left without a local branch.

Pharmacies, many of which are family-run businesses, are unable to offset the higher tax burden by raising prices, which are fixed by the NHS. Roughly 90 per cent of pharmacies’ income comes from the health service, the NPA said, leaving owners with no commercial lever to pull when fixed costs rise.

Prime Minister Andy Burnham has made lowering business rates for high-street businesses a key pillar of his summer policy blitz, announcing a 20 per cent reduction for pubs, clubs and live music venues from April next year. Pharmacies have been excluded from the relief.

The tax squeeze has intensified since business rates were increased for many properties after Rachel Reeves’s second Budget. Bills have also been affected by the latest revaluation of commercial property, which fed new rateable values into bills from April. GPs and NHS dentists, meanwhile, have their business rates reimbursed.

Onkar Singh, who runs 20 pharmacies across the Black Country, Staffordshire, Herefordshire and Worcestershire, has seen his business rates bill rise by roughly 20 to 30 per cent in the past year. His total bill is now about £250,000.

He has closed two of his pharmacies in the past two years and reduced opening hours across virtually his entire estate. He has also been forced to cut back services, such as offering free medicine deliveries to elderly patients.

Singh said: “The last three years have been the worst period in my 30 years of pharmacy.

“People are having to close a lifetime’s worth of work and effort, and having to close or reduce hours or dip into their pension pot just to keep going for their communities.”

The NPA survey found that 92 per cent of pharmacies said their rates bill was preventing them from investing in their workforce or renovations. Some pharmacists have warned that their bills have tripled, echoing the anger among small firms over the revaluation that prompted thousands to write to the then chancellor.

Singh said the impact was particularly painful because pharmacies were often being asked to fill gaps elsewhere in the NHS.

He said: “It is frustrating that pubs and restaurants get the headlines, but pharmacies are actually delivering care.

“The NHS accepted that pharmacy did an exceptional job, but in terms of funding and support with business rates we seem to be forgotten.”

The NPA said 44 pharmacies had already closed this year, leaving the national network at its smallest since 2006. Nine in 10 council areas have lost at least one pharmacy since 2022.

Olivier Picard, the chairman of the trade group, said pharmacies should receive the same rates treatment as GPs and dentists, arguing that they provide an essential health service.

A government spokesperson said: “Pharmacies already benefit from our wider business rates reforms, including permanently lower multipliers and our £4.3bn package to support ratepayers, and the government has increased funding for the sector by £340m this year as part of our shift to bring care closer to home.”

For owners of other high-street businesses, the pharmacy case is a reminder that rates relief is being targeted sector by sector, as with the £150m package for town centres that business leaders dismissed as a sticking plaster, rather than applied across the board. Firms whose prices are set by a third party, whether that is the NHS, a franchisor or a long-term contract, have no way of passing the increase on, and the NPA’s finding that 92 per cent of pharmacies have shelved investment shows where the money goes instead.

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk