With the recent news of business rates continuing to rise, the Chancellor Phillip Hammond has said he will listen to concerns, but was not committing to a change in policy anytime soon.
Business rates are a tax charge on properties, for example, shops, warehouses and factories, and is generally worked out at how rateable a business property is, essentially the higher the rent the higher the business rates, which usually equates to about half the total rent paid on a property.
As rates are usually reviewed every 5 years, this is the first time in seven years that they have been reviewed which means its disruption is much greater, with rates set to rise. ‘Queen of Shops’ Mary Portas has already warned that rates could be increased by up to 300% and will kill off hundreds of independent retailers and has even called for Theresa May to scrap the scheme. This has been backed up from the CEO of Sainsbury’s, Mike Coupe, who calls the system ‘archaic and outdated’. Speaking to Retail Gazette, he said, “Our challenge to the government is for a fundamental reform of business rates because we believe it is an archaic and outdated system. More than that, we’d like the government to look at business taxation in general. We could see high streets face serious challenges and ultimately more closures. It could impact investment in places that most need it, in areas of the country where there is already a marginal call on investment. Sainsbury’s itself could see its tax bill shoot up from £120 million to nearly £500 million.
A host of lobby groups including the British Chamber of Commerce and Institute of Directors have approached the government to campaign against this change and calls for the scheme to be amended. The Federation of Small Businesses, echoing Mary Portas, believes that half a million forms could have a tax increase of up to 300%.
The rates themselves are set to rise in areas where property prices have increased sharply, though the system is said to be unfair on areas of undeveloped land being used receiving discounted rates. A lot of people believe that the rates will be an unfair advantage to online retailers, as they generally don’t have property to sell their wares from but a lot of online retailers use fulfilment houses and warehouses which will be taxed, and the prices need to be absorbed somewhere.
Dr Adam Marshall, director general of the Birmingham Chamber of Commerce, said: “The current rates system is broken, and despite attempts by successive governments to introduce marginal reforms, the fundamental unfairness of business rates remains.
“We’re calling for steps to be introduced which would help alleviate some of the excessive pressure put on businesses by rates.
“The policy of fiscal neutrality means there are winners and losers across the country from reforms, but limits the government’s scope to bring about fundamental change to the system.”
It’s true that business rates in the UK are much higher than other countries, though where you live in the UK could also affect how much you pay, with space in the East Midlands costing much more than in the North West. Communities and Local Government secretary, Sajid Javid, and the Treasury Chief Secretary have both said that there has been a “relentless campaign of distortions and half-truths about the planned changes.” They also insisted that the vast majority of businesses would see no change or even a fall in their rates.
If you would like any further information on business rates and how they could affect you then please contact us at the Giftware Association on firstname.lastname@example.org or our local chamber of commerce contact email@example.com