The BRC has welcomed the cut in business rates for retailers from April but added that the need to reform the “broken” system was “far from over”.
The BRC was responding to a Treasury press release saying that business rates for retailers would fall by 20% from April 1. This follows the measures outlined by Chancellor Jeremey Hunt in his Autumn Statement to ensure businesses pay a fair share.
BRC chief executive Helen Dickinson commented: “The Government took an essential step towards longer term reform of the broken Business Rates system by the scrapping of downwards phasing of transitional relief. Finally, retailers are paying only what they owe, rather than overpaying their rates bill even when the value of their property had already fallen. Yet the need for Business Rates reform is far from over, and the changes made in the budget are a far cry from the fundamental reform promised in 2019.
“The broken Business Rates system is a drag on investment, jobs, and the vibrancy of town and city centres. For example, while other business taxes like Corporation Tax and VAT rise and fall with the changes in the economy, Business Rates must be paid in full whether firms are making a profit or a loss. This makes Business Rates a final nail in the coffin of many struggling stores – shutting shops, costing jobs and preventing new openings. Any meaningful plan for the future of our town and city centres must have wholesale reform of our Business Rates system at its heart.”
Business rates relief for eligible retail businesses will be extended and increased from 50% to 75% from April 1, up to £110,000 per business in 2023/24. It is estimated this will save the retail sector around £2.1 billion.
With regard to the transitional relief scheme, bill increases caused by changes in rateable values will be capped at 5% for small, 10% for medium and 30% for large properties from April 1.
Measures also provide relief for the more than 800,000 small businesses that will lose eligibility for Small Business Rates Relief or Rural Rates Relief, capped at £600 a year.
Retailers will also benefit from the freezing of the business rates multipliers, which will be frozen at 49.9p and 51.2p, which amounts to a tax cut of around £9.3bn.
Stating the Government’s point of view, Victoria Atkins, financial secretary to the Treasury, said: “The firms that make up our high streets are facing challenging times and I want them to know the Government is on their side. One of the ways we can help them is by making it easier – and cheaper – to do business.
“This package does just that. It protects all from rising inflation, partly caused by Putin’s brutal war in Ukraine, it means a tax cut for many as shops will pay one fifth less in rates and it reflects the modern market by finally addressing the balance between online and in store sales.”