Boaded up shop

The government has discussed plans for a potential £150m package to help retailers hit by the impact of business rates, it confirmed today.

Communities secretary Sajid Javid held talks on Wednesday with business rates experts CVS aimed at diffusing a crisis ahead of next week’s Budget.

The agency presented proposals for a £100m-£150m package for small firms set to be hit the hardest under the new business rates revaluation, which it said would deal with the immediate impact of April’s tax bills bombshell.

Today a spokesman for the DCLG confirmed the talks had taken place and Javid had been in “listening mode”.

CVS said thousands of business were operating on a “cliff edge”

Although the government said no small business would see more than a 5% increase in rates this year, CVS described the transitional relief arrangements in place as “woeful and inadequate”.

CVS chief executive Mark Rigby presented a model of potential discounts for businesses, which would reduce the new tax liability in April for the 24,986 properties whose rateable value is set to move outside the eligibility criteria of the old small business rate relief scheme.

Analysis by CVS shows they face their tax liabilities rising by £45m in April, up £1,835 on average, with some of the hardest hit - who have not paid any rates during the last seven years - soon to be facing bills of £3,100.

Rateable values for shops and pubs are set to rise by over 8% and 14% respectively. Medium-sized premises with a rateable value over £20,000 (£28,000 for London) will see an upward maximum increase of 12.5%, plus inflation, in April.

The government is said to be considering the introduction of a scheme similar to the small business retail relief scheme that ended in 2016, in an attempt to mitigate the impact of the 2017 revaluation and address the concerns of some 68,393 small properties within the retail and leisure sectors facing substantial hikes.

It is also understood that the Treasury is considering raising the threshold for tapered relief. But CVS pressed for the acceleration of the switch from the Retail Price Index (RPI) to the Consumer Price Index (CPI) from 2020 to April 2017, three years ahead of schedule

“The secretary of state was clearly in ‘listening mode’ and it was evident to me he was acutely aware of the potential impact that the revaluation will bring to some communities, and the anger felt by small businesses, particularly the retail and leisure sectors,” added Rigby.

“He was clear in his determination to find a meaningful, targeted solution to ease the financial burden for those most in need ahead of the April tax changes.”

The government has been facing a growing revolt over the proposed shakeup of the tax appeal system, with 13 leading bodies, including the BRC, CBI and ACS, claiming it could be illegal under local government finance laws.