Retailers call for business rates ‘level playing field’

By Liza Helps Property Editor Logistics Matters

BRC RESEARCH suggests that retailers are paying 7.4% of all business taxes despite accounting for just 4.9% of the UK's total economic output in 2023.

The Retail Rates Corrector – a 20% downward adjustment in business rates paid on retail properties - aims to redress the imbalance. This tax burden holds back investment in people and places – directly affecting the 3 million people employed by the industry, and the 2.7m additional people employed within the supply chain. 

According to the BRC, the UK has been losing shops at a rate of over 1,000 a year, and research suggests that without action a further 17,000 shops could close over the next decade. The Retail Rates Corrector aims not only to stem this tide of shop closures, but to unlock new investment in jobs, shops and communities.

The 71 CEOs, covering groceries, fashion, furniture, electronics and more, came together to write to the Chancellor. The open letter notes: “We believe now is the time to level the playing field between industries with a retail adjustment to rates as this is the best way to achieve this manifesto commitment. We are writing to ask you to use the Autumn Budget to apply a Retail Rates Corrector, a 20% reduction to rates bills for retail properties of all sizes in all locations”.

British Retail Consortium Chief Executive Helen Dickinson, said: “Retail has been the golden goose, generating tax revenues far beyond the industry’s size, but the current situation is not sustainable. The government should act to rebalance the system and ensure all industries are paying their fair share. This in turn would drive increased retail investment in people, places and communities. The Budget is the perfect opportunity to lay the groundwork for local investment that delivers for retail’s customers, delivers for its employees, and delivers for the economy.”

However, this could add fuel to the fire that warehouse operations could be made the scapegoat and see a further increase in the business rates burden. The Labour  manifesto included a commitment to replace business rates with a new system which would raise the same revenue while levelling the playing field “between the high street and online giants’. There is a fear that Government will make no distinction between online giants and UK retailers carrying out omnichannel operations or indeed take note of the distinction between  online giants and the supply chain SMEs who through the very nature of the business work out of larger buildings.

Last year the UK Warehousing Association was lobbying  the then Conservative Government to make the case that warehouses should qualify for support on business rates following the 2023 Business rates Review which saw some UKWA members’ business rates bill increase 70%.

“In March [2023] we wrote to the Chancellor highlighting the unfairness of the proposed increase in business rates for warehouses and challenging the assumption that businesses with larger buildings require less support, a view that fails to recognise the reality of low-margin SMEs operating within the warehousing sector.”

Last month the UKWA wrote to the Chancellor reiterating the issue and requesting that she addresses the ‘unfair and punitive’ basis for assessing business rates, which has put warehousing at a significant disadvantage’.