Retail contributes £7.3bn 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). UK property taxes are the highest in Europe at 3.4% of GDP, compared to 0.5% in Germany and 2.4% in France. 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.
After more than two years of the BRC’s campaign to fundamentally reform business rates the Government agreed to review the structure of the system. 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 and shaping the new strands of activity such as the localisation of business rates, the frequency of valuations, and transitional relief for the forthcoming 2017 Revaluation, all of which could collectively make a big difference to retailers.