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BRC urges UK govt for business rates reform in budget
17 Feb '20
2 min read
Pic: Shutterstock
Over 50 major retailers recently called on the British government to take the first steps towards fundamental business rates reform in the budget. In a letter coordinated by the British Retail Consortium, they demanded fixing of transitional relief, a component of the business rates system. Business rates are based on the rateable value of a property.
Transitional relief limits the speed at which a firm’s business rates liability changes in response to changes in its rateable value. To achieve this, it staggers the speed at which ‘underpayers’ move to their higher business rate liability (upwards transition), and funds this by slowing the speed at which ‘overpayers’ move to their lower liability (downwards phasing).
This system has two consequences: it forces retailers to subsidise other industries—£543 million net over the last three years—and forces locations outside London to subsidise London businesses—£596 million net over the last three years.
Retail accounts for 5 per cent of the UK economy, yet is burdened with 10 per cent of all business taxes, and 25 per cent of business rates, BRC said in a press release.
The letter has been signed by 52 major retailers and associated trade bodies including the chief executive officers of supermarkets, food-to-go, fashion, homeware and department store retailers. It notes that the ‘burden of business rates has become unsustainable for many retailers’ and that the system is broken, a view echoed by the Treasury Select Committee in October 2019.
Scrapping downwards phasing would remove the harmful effects transitional relief has on retailers and businesses in the North of England. This could be achieved by central funding of upwards transitional relief, the press release said.
“The future of retail is an issue that matters to people everywhere - it employs three million people and serves the needs of the entire country. Yet transitional relief undermines both the industry as a whole, and many regions that it serves. Northern high streets effectively subsidise London banks, forcing a £600 million transfer of wealth to the capital; this could be used to support investment in people and technology that would benefit all parts of the UK,” BRC chief executive Helen Dickinson said.
Transitional relief limits the speed at which a firm’s business rates liability changes in response to changes in its rateable value. To achieve this, it staggers the speed at which ‘underpayers’ move to their higher business rate liability (upwards transition), and funds this by slowing the speed at which ‘overpayers’ move to their lower liability (downwards phasing).
This system has two consequences: it forces retailers to subsidise other industries—£543 million net over the last three years—and forces locations outside London to subsidise London businesses—£596 million net over the last three years.
Retail accounts for 5 per cent of the UK economy, yet is burdened with 10 per cent of all business taxes, and 25 per cent of business rates, BRC said in a press release.
The letter has been signed by 52 major retailers and associated trade bodies including the chief executive officers of supermarkets, food-to-go, fashion, homeware and department store retailers. It notes that the ‘burden of business rates has become unsustainable for many retailers’ and that the system is broken, a view echoed by the Treasury Select Committee in October 2019.
Scrapping downwards phasing would remove the harmful effects transitional relief has on retailers and businesses in the North of England. This could be achieved by central funding of upwards transitional relief, the press release said.
“The future of retail is an issue that matters to people everywhere - it employs three million people and serves the needs of the entire country. Yet transitional relief undermines both the industry as a whole, and many regions that it serves. Northern high streets effectively subsidise London banks, forcing a £600 million transfer of wealth to the capital; this could be used to support investment in people and technology that would benefit all parts of the UK,” BRC chief executive Helen Dickinson said.
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