Retail contributes approximately £7bn of business rates annually to the Treasury – nearly a quarter of all business rate receipts, and far more than any other industry and disproportionate to our six per cent share of the economy (Gross Value Added). Property tax as a proportion of total taxation is nearly 13 per cent in the UK – twice the EU average. A lower level of property taxation that is competitive compared to other OECD and European countries would encourage growth in local communities across the country.
The BRC played a central role in the weeks before the March 2017 Budget underpinned by an extensive campaign, high profile public correspondence with the Chancellor, other members of the Cabinet and MPs and extensive media coverage across a range of media outlets.
At the Budget the Chancellor announced £435m in business rates relief, which he stated is designed to assist those companies most affected by the 2017 revaluation to be financed from central funds and not from a redistribution within the existing revaluation settlement. The BRC also shared its concerns regarding the proposed transitional arrangements following the 2017 revaluation resulting in £35m in savings for retailers.
Alongside the Budget, government modified the proposed requirement that any valuation to be amended would need to be “outside the bounds of reasonable professional judgment” to instead rely on the Valuation Tribunal to judge whether the valuation constitutes a “reasonable valuation” providing greater flexibility in the consideration of appeals.
In March 2016, the Government announced that from 2017 the Small Business Rates Relief scheme would be expanded, the threshold for the standard multiplier would be increased to £51,000 of Rateable Value (meaning all hereditaments valued below that do not pay the 1.3p SBRR supplement).
It also committed to more frequent revaluations and a switch from RPI to CPI indexation from 2020. Importantly, the Treasury agreed with us that all these reforms would not be paid for within the business rates system.
Overall, these changes mean that rates will rise by £6.7 billion (or approximately £1.8 billion for retailers) less than they otherwise would have over the next five years in England. Also as a result of our work, the Government is modernising the administration of business rates by aiming to introduce more frequent business rate revaluations (at least every three years) and has committed to overhaul billing and collection to include linking to HMRC digital accounts.
MORE TO DO
While we have indeed achieved a lot, we have not got all that we were seeking - there was no commitment to freeze the multiplier or to significantly reduce the burden overall. Going forward, we remain absolutely committed to keeping fundamental reform on the table in addition to implementing CPI indexation in April 2018 and more frequent revaluations from 2020.