Business rates rise brings closure risk for 400 stores

Approximately 400 stores are at risk if a higher business rates tax band is imposed, research by trade association the BRC revealed.

Closures could be sparked by a new rates surtax on premises with a rateable value above £500,000 and could lead to the loss of 100,000 jobs , as well as hitting local councils’ business rates receipts by well more than £100m a year.

Altogether there are approximately 4,000 large stores with a rateable value of more than £500,000. Over the last five years, 1,000 such shops have closed as retailers have contended with competitive trading conditions and higher costs including rates.

While they account for 5% of the economy, retailers pay more than 20% of all business rates bills. Large stores alone pay a third of retail’s total. 

The new surtax on large stores is designed to help fund a permanent reduction in rates across retail, hospitality and leisure.  The BRC wants chancellor Rachel Reeves to achieve that change without imposing the cost on bigger stores when she unveils the Budget in November. The BRC arges that could be done by “slightly increasing” rates for large properties such as office blocks and other commercial buildings.

BRC chief executive Helen Dickinson said: “Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafes, restaurants and smaller and independent shops.

“After years of rising costs, far too many stores have disappeared, leaving behind empty shells that once thrived at the heart of our communities. Four hundred more large stores could disappear if the government forces them into its new higher tax band. This would mean up to 100,000 jobs lost, emptier high streets, and less revenue for the Exchequer. 

“The chancellor can back families, jobs and high streets this Autumn by excluding large shops from the new higher business rates tax band. This would not cost the Exchequer a penny, yet would help secure the future of 400 retail stores, and the communities they support, right across the country. But failure to act risks shuttering hundreds more stores, costing jobs, communities and the economy far more in the long run.”

Yesterday the government published an interim report acknowledging a case for “fundamental change from a ‘slab’ to a ‘slice’ system” for business rates.