The business rates burden for retailers large and small, online and physical, needs to be reduced. As part of the Government’s goal to maintain a competitive tax environment for business, further measures to reform business rates are needed to fix an unsustainable system that continues to discourage investment in jobs and growth.
Despite last year’s review, retailers will pay an additional £2 billion over the next three years compared to the last three years. Business rates are deterring investment in local communities, causing shop closures and job losses in hard-pressed communities and preventing retailers from delivering what their customers want in an efficient and cost-effective way.
In England, the retail industry contributes approximately £7 billion of rates annually – nearly one-quarter of all receipts – far more than any other industry. Internationally, the UK pays among the highest tax on property as a proportion of GDP. A fairer level of property taxation, which is internationally competitive, will encourage growth and ensure continued business tax revenue.
The BRC recommends the following:
Revisit the business tax road map and commit to further reform
In the road map published before the EU referendum, the Government committed to reform some aspects of business rates, which we welcomed. However, further action is needed for businesses to effectively plan and invest. An important component of an updated road map should be a timetable to reduce the disproportionate burden of business rates and commit to fundamentally reforming business rates alongside the entirety of business taxation.
Freeze rates for two years and commit to further reform
Fundamental reform of the business rates system is needed and must be considered as part of a wholesale modernisation of business taxation. The BRC’s proposal for a two-year freeze in rates increases would take some of the cost pressure off the industry, while allowing time for a dialogue between government and industry to develop a proposal for a modern business taxation system, fit for commerce in the 21st century, which supports business growth and improves productivity.
Fix the Check, Challenge and Appeals system
The new system of appeals has added to the complexity of correcting inaccurate valuations. We agree with the principle to reduce the number of unnecessary appeals, however, given the large burden it is only fair businesses have the opportunity to challenge valuations. Improvements are needed to enable ratepayers to easily claim multiple properties in addition to allow a ratepayer to easily track progress and communicate with the Valuation Office.
Improve independent valuations, enabling three-yearly revaluations from 2021
The Government has chosen to continue relying on the Valuation Office to conduct independent valuations to enable more frequent revaluations. This will likely require ratepayers sharing more information on their property and rent upfront. In addition to further information, the Valuation Office requires adequate resources to ensure better communication with ratepayers leading to fair and accurate valuations.