BUSINESS RATES REFORM

LEGISLATION: 2021 BUDGET

RATES REFORM NEEDED TO MAKE IT ‘FAIRER FOR PHYSICAL STORES’

ACS HAS JOINED A WHO’S WHO OF LEADING RETAILERS AND TRADE BODIES TO DEMAND REFORM OFTHE BUSINESS RATES SYSTEM TO ENSURE PHYSICAL STORES AREN’T DISADVANTAGED COMPARED TOONLINE RETAILERS.

In an open letter to Chancellor Rishi Sunak, published on Monday, 18 groups including ACS, BIRA, Usdaw, Tesco and Waterstones have called on the Government to make fundamental changes to the way that business rates are collected so that physical stores aren’t at a disadvantage compared to online retailers.

The letter makes key recommendations around reducing the business rates multiplier and levelling the playing field on tax.

In its own submission to the Treasury ahead of the Budget, ACS has echoed calls for wider reform and highlighted the need for additional short term reliefs to avoid a sudden shock of high rates bills in April this year. It noted that almost half of the convenience stores in the sector (42%) would have had to close without the financial support through rate relief, grants and loans provided by the Government over the last year.

ACS Chief Executive James Lowman said: “It is essential that the Government balances the business rates system to ensure that physical retailers aren’t disadvantaged compared to their online only counterparts, and can invest in improving their stores without having to face higher business rates bills as a result.

“In the coming months we will be approaching a critical time in the nation’s recovery from Covid-19. During this time, it’s crucial that local shops are given as much notice as possible to plan ahead so that they can continue to serve their communities. We are calling on the Government to reintroduce business rates gradually and not as a sudden shock that could put local shops, especially those on high streets and in town and city centres at risk.”

ACS’ full submission to the Treasury ahead of the Budget on March 3rd is available here.

KEY RECOMMENDATIONS

The letter makes the following specificrecommendations:1. Reducing the business rates multiplier: Themultiplier has risen from 35% in 1990 to over50% today. It should be significantly reduced,focusing on a level closer to the original rateof around 35% of the market rent. This wouldmake the UK more competitive and show theGovernment is backing British shops.

2. Level the playing field on tax: Currently onlineretailers pay a lower proportion of tax persale than bricks and mortar retailers. We urgethe Government to rebalance the tax base toensure online and bricks and mortar retailerspay a similar proportion of tax and we welcomethe consideration of viable options in theGovernment’s ‘fundamental’ review.