The Government in committed to seeing healthy high streets and a thriving retail sector in Britain.
The Government in committed to seeing healthy high streets and a thriving retail sector in Britain. When next week, Parliament debates a new Growth and Infrastructure Bill, one of the provisions is the postponing of the next business rates revaluation in England until 2017.
This will give retailers and local shops much needed financial stability, enabling long term planning, and avoid unexpected hikes in business-rates bills over the next five years. As business rates will remain linked to inflation, there will be no real-terms increase for retailers over this period.
Business-rates bills are calculated by taking the rateable value of a property and applying a “multiplier”. While aggregate rateable values have fallen, this would automatically be offset at the revaluation by a higher rating multiplier. Retailers would just be required to pay a higher proportion of their rateable value. The Valuation Office Agency’s best estimate of rateable value movements suggests there had been a 13pc drop in values in England since the last valuation.
Because revaluations are revenue neutral overall the tax take would have had to rise by 20pc following a 2015 revaluation. Whether the value goes down on one side, or up on the other, the taxman will demand the same overall tax take.
Of course, with any revaluation, there will be some winners. There will be losers, too.
If a small number of high-value sectors and areas saw very sharp declines then the average fall could be very large indeed – meaning that many more retailers whose rents have fallen but by less than the national average would have seen tax increases from 2015. By definition, we have not undertaken a formal revaluation, so any figures will be rough estimates.
The Valuation Office Agency’s best estimate of rental value movements across England, which ahead of carrying out the detailed work necessary for a revaluation is based on professional judgments informed by limited rental market evidence up to January 2012, illustrate that many retailers with reducing rateable values could expect to see increases in their actual rates bills.
Extrapolating from these early estimates suggests that 800,000 premises would see a real-terms rise in their rates bill, where only 300,000 premises would see their bill fall.
Smaller and medium shops are likely to be harder hit and whilst some in the retail sector have criticised the postponement our estimates suggest that retail is one of the sectors which would face big hikes in bills in a revaluation.
The Coalition Government recognises that business rates are a big burden for small retailers in particular, which is why we extended small business rate relief, made it easier to claim that rate relief, and introduced new powers for councils to introduce local business rate discounts.
The engines of economic growth aren’t found in the corridors of Whitehall but in the foundries of great local British companies. The best thing Government can do to help local shops is to provide them with a stable economic environment. This is why we want to protect local retailers from soaring tax bills.
- Brandon Lewis MP, Minister for Local Government