UK Retailers Urge Government To Ease Local Tax Burden

by Jason Gorringe, Tax-News.com, London

13 January 2009

Beleaguered retailers in the UK could face a total local business rates bill of GBP7bn by 2010/11 as a result of new legislation to be considered by parliament on Monday.

The British Retail Consortium (BRC) has published a study ahead of the second reading of the Business Rate Supplements Bill which claims to show that annual increases, business rates revaluation, loss of empty property relief and business rates supplements could add GBP1.6bn to the GBP5.45bn retailers paid in business rates in 2007/2008.

Stephen Robertson, British Retail Consortium Director General, said: "Many retailers are struggling with the triple whammy of falling sales, crushed margins and rising costs. The government must revise its plans to impose a range of extra burdens, which can only increase the pressure on retailers and destroy more of the UK's three million retail jobs."

In the UK, business rates, a type of local taxation, are paid by businesses and other organisations that occupy non-domestic premises. The payments help fund local services provided by local authorities, such as the police and the fire and rescue service. Business premises are given a rateable value. The amount of business rates payable is calculated using the rateable value and a 'multiplier,' which is set by the government. Different multipliers are used for England, Wales, Scotland and Northern Ireland.

Say the BRC, the GBP1.6bn increase in government-imposed retail property costs comprises:

• Empty Property Rate Relief – abolished in April 2008. Even allowing for the temporary increase in the threshold at which empty property becomes liable for business rates announced in the 2008 Pre-Budget Report, this will cost retailers GBP115m a year.
• Business Rates Multiplier – in normal circumstances business rates are increased each year in line with the previous September's RPI inflation. Last September RPI was 5%, an unrepresentative seventeen-year high. At this rate, retailers will be forced to pay out an extra GBP250m a year from April 2009 on top of the GBP210m added to their business rates bills in the current financial year.
• Business Rates Revaluation - using April 2008 rental values as a basis for business rates from April 2010 is unjust. The property market has entered uncharted territory since April last year with unknown variations between different localities and business property types.
• Business Rate Supplements – local authorities are to be given the power, from April 2010, to charge businesses a supplement on top of their existing business rates bills. Nationally this could cost retailers an extra GBP160m a year.

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