The BRC is calling on the government to exempt shops from plans to hit the largest properties with higher business rates from next year.
The trade body is hoping ministers will listen to its warnings that taxing large shops more will also harm smaller ones the plans are supposed to help.
Under the Non-Domestic Rates Bill, which became law earlier this year, business rates are set to rise across all sectors for properties with a rental value above £500,000 a year. The additional tax collected will fund a business rates discount for properties in retail, hospitality and leisure (RHL) with a lower rental value.
“We’re campaigning for no shops to be included within the rates for over £500k,” said a BRC spokesman. “That’s what we hope for, that’s what we’re asking.”
BRC CEO Helen Dickinson said: “If the government includes shops within its new higher rates threshold, then many retailers will be forced to rethink their investment plans.
“The closure of larger stores would harm the local communities they support, costing jobs and reducing footfall in the area they serve. If government wants to improve high streets and help local communities, they must ensure that no shop pays more under their new rates reforms.”
The Bill enables Rachel Reeves to add a ‘surcharge’ of up to 10p to the multiplier used to calculate business rates for properties over the £500,000 threshold.
Some reports have suggested there are fears within retail that the Chancellor could opt for the maximum surcharge due to pressure on wider public finances.
However, the BRC dismissed the notion, noting the surcharge could only be used to fund the business rates discount for smaller RHL premises, rather than ease wider fiscal pressure.
“The plans is revenue-neutral,” said the BRC spokesman.
John Webber, head of business rates at property consultancy Colliers, said that meant exempting large shops from the surcharge would leave occupiers of large properties in other sectors paying for more of the discount for smaller RHL premises.
“Anything non-RHL over £500k – offices, manufactures, hospitals – will be even more hammered,” Webber said. “Hardly good for UK plc.”
In evidence submitted to the Treasury in December last year, M&S said 21% of its stores in England were over the £500k threshold, and one in three of those were in high street locations.
“Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy – if larger shops close, smaller shops suffer,” the retailer said.
“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores. Particularly when these measures come on top of recent changes to National Insurance which are particularly difficult for retail, and at a time when vacancy rates are up and footfall down in towns and cities across the country.
“After a budget which placed a cumulative burden of £7bn on the retail sector, it cannot be right that these reforms leave many of the biggest retail employers either worse off or still left with a disproportionate business rates bill.”
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