Big retailers face paying far more in business rates than their pureplay counterparts as measures designed to ensure the latter shoulder more of the burden look likely to flop.
Retailers such as grocers and department store businesses face a steep increase not just on their shops but also on their corporate headquarters and distribution centres, analysis by tax services specalist Ryan has revealed.
Only 129 warehouses, or one in 12 of all large distribution warehouses, are operated by pureplay retailers, compared with 247 run by retail chains to supply their own stores.
Retail, hospitality and leisure (RHL) businesses may face up to £482m a year in extra business rates on their physical premises, compared to £262m for large distribution warehouses.
Almost three times as many RHL properties – 4,353 – could be hit compared to 1,589 large distribution warehouses.
Retailers specifically could have to pay up to £358.5m across 3,274 properties, including 1,803 hypermarkets and superstores, 483 out-of-town retail warehouses, and 363 large shops.
Ryan property tax leader Alex Probyn said: “The bluntness of this policy is stark. Only 129 properties are pure online retailers, yet thousands of supermarkets, department stores and out-of-town chains – plus the HQs and distribution centres that support them – will be dragged into this new tax. Instead of targeting the online operators it was designed to address, the policy risks penalising the very businesses that anchor the high street and provide mass employment.”
From April next year, the Treasury intends to introduce a new business rates surcharge of up to 10p on properties with a rateable value of £500,000 or more. The change is designed to fund lower rate multipliers for smaller premises. Big retailers have warned that the change will have consequences even including some store closures. Following the warnings, the government is thought to be considering changing Sunday trading laws so that grocers facing higher tax bills could open for longer.
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