Retail Properties with a Rateable Value of over £51,000
Whilst only 9.75% of all retail properties in England have a Rateable Value over £51,000 and are therefore precluded from the new retail relief, those premises account for 68.58% of the total Rateable Value for the entire retail sector which determines business rates bills.
50,000 Retail Premises Face £128 Million Inflationary Rate Rises Next April
Business rates bills due to land next April for the 2019/20 period for 47,350 retail premises with a Rateable Value above £51,000 who are precluded from the new retail relief, will be forced to pay an extra £127.88 million in inflationary rate rises next April, pegged to September’s CPI rate.
This hike is despite the crisis engulfing the high street and at a time major large retailers are reducing their footprint and headcount.
£900m Retail Relief
Despite the Chancellor stating that nearly half a million small retail premises would benefit from £900 million of business rates help over the next 2 years until the next revaluation, according to our analysis of official government data over 300,000 of those premises already have a complete exemption from paying business rates as they are in receipt of Small Business Rates Relief as their Rateable Value is below £12,000 .
Robert Hayton, Head of Property Tax, Altus Group, says “The Budget measures, whilst great for independent retailers with smaller premises, show little thought about where taxpayer money would be best spent and does nothing to help those major retailers who are reducing their store portfolios and headcount often citing high rates as a contributory factor.
“The measures didn’t address the long term unfairnesses for those large premises who’s property value has fallen significantly but are denied the commensurate tax reduction nor did they level the tax playing field with large online only retailers which were the key asks of the sector.”
The Treasury have stated that the retail discount will be subject to strict EU rules restricting state aid to €200,000 per business over a three year period, which will result in shops which are part of large chains missing out, given their large estates.
Robert Hayton analysed over 2,000 retail sites in England occupied by large shop chains such as Arcadia Group, WH Smiths, New Look, M&S, Claires Accessories, Next and Thorntons.
Hayton says that, of the retail sites operated by large chains in the analysis more than 1 in 3, 740 out of the 2,052 in total, had a Rateable Value of less than £51,000 and were in principle eligible to the new retail relief but stressed “most large chains will reach the de minimis regulation limit pretty quickly one way or another and will be precluded.”
Whilst the UK officially exits the European Union on 29 March 2019 before the start of the next financial year, through transition arrangements and under the withdrawal agreement, the UK has accepted that it will stay in a “dynamic alignment” with the EU on state aid rules.