Business rates ‘tinkering’ will see many retailers miss out on cut
The reduction in business rates announced by the Chancellor in the Budget will provide mixed results for retailers, with the impact likely to miss many.
Philip Hammond told MPs that retailers with a store with a rateable value of less than £51,000 would see business rate bills cut by a third.
However the £900m impact of the cut will vary enormously depending on where the store is.
A random selection of retail units currently for rent shows the scattergun approach the cuts will have.
A four-storey 5,033sqft unit in central Brighton with car parking, which was the former Warren Evans branch, has a rateable value of £31,750 and a rates bill of £15,240. The Budget reduction reduces the bill by £5,080. Although a four figure saving, it is just over two and a half week’s rent (£100,000 a year).
In Leamington Spa, Warwickshire a four-storey 5,264sqft unit in Regent Street has a rateable value of £70,000 so it there is no reduction in the rates bill. The rent is the same as the Brighton unit.
In central Leeds, the 19,030sqft Lands Lane unit of Poundland has a rateable value of £290,000, so no reduction, and a rates bill of £142,970. Add to this a rent bill of £350,000 and a service charge of £64,218.
In Ashtons Green Drive, St Helens a 476sqft unit has a rateable value of £3,900 and a rates bill of £1,872 so it would save £624, in this case just over seven weeks of rent (£4,500 a year). However, the unit should already be covered by small business rate relief so shouldn’t be facing a rate bill.
While retailers who match the criteria of the rateable value, will welcome any reduction in their costs, it seems the figure of 500,000 retailers making savings may require explanation by the Treasury, as of the majority of stores making savings are likely to be small units on tertiary streets, which are far more likely to be fast food takeaways than furniture or flooring retailers, and are already covered by small business relief.
‘The Government has missed a much-needed opportunity to help the retail industry. While we welcome measures to assist smaller retailers, the majority of the UK's 3.1million retail workers are employed in businesses that will not benefit from today’s business rates announcement. If the Government is to truly back business, it must engage in more extensive business rates reform to help all retailers and their employees through this period of transformation,’ said Helen Dickenson, British Retail Consortium chief executive.
‘Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high.’
Image: The former Warren Evans store on Gloucester Road, Brighton is available through Oakley Property.