Retailers to experience a delay in business rates reform

Plans for overhaul of the business rates system has been pushed back, with Rishi Sunak only expected to unveil smaller changes to the system in this month’s Budget.

During the pandemic, many independent retailers were given Covid related business rates, however with the relief ending soon, retailers have expressed their frustrations with the system.

Business rates reform has been brought up multiple times by retailers and business owners who have emphasised its necessity.

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Amrit Singh, of Nisa Local High Heath in Walsal, shared his views with Better Retailing on the need for a business rates reform, and for the government to provide “clarification” over business rates.

“I personally think that they should be scrapped altogether. I don’t think it is very competitive – if you look at online businesses, they can trade online and do not have to pay any rates. I think retailers should be rewarded for keeping our premises open in the modern market. If business rates can’t be removed, then they should at least make the process simpler”, he added.

The Telegraph has reported that according to Government sources, Chancellor Rishi Sunak is committed to reforming the system in England, but has not considered the impact of a delay.

The Government source was quoted in the Telegraph saying: “I think the expectations are quite high and the reality is we just haven’t had enough time to look at it. It’s obviously something that needs looking at. Rishi is keen to do a proper reform of the whole system.”

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Minor changes to the system are expected to be announced, however “wholesale reform” will be delayed until a later date.

In response to the Government’s response, a number of trade bodies in the retail industry have called on the rates system to be overhauled to incentivise investment rather than penalising it through the introduction of a business growth accelerator, similar to what is already in place in Scotland.

John Webber, head of business rates at Colliers an investment management company said, “Reports that the Government will not be announcing any major overhaul of the Business Rates system in the forthcoming Budget is massively disappointing. It is frustrating that 18 months into a consultation which has already been delayed four times in the last year, that the Government is still not ready to respond to industry calls for proper reform. Delayed action will be a further hit to businesses – it will cost jobs and will do nothing to save the high street.

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“Obviously we will need to wait to see what is in the detail in the Budget- but we would hope “tinkering” would include a recognition that in current form business rates are too high and that the multiplier at current levels of 51p in the pound is unsustainable for business. A 50p plus tax is just too high. The Chancellor, at the very least,  should commit to a reduction of the multiplier to around 30p when he stands up at the end of the month. That would provide a significant relief to businesses across all sectors, particularly those in retail and hospitality”, he added.

The Government’s consultation had previously proposed a change to business rates revaluations to take place every three years instead of five, which trade bodies said they were in support of.

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