Editor: High street retailers’ recent calls for a cut in business rates give an early indication of the pressures the chancellor faces ahead of this year’s Autumn Statement. With all eyes on the direction of inflation and whether it will continue to drive the uniform business rate (UBR) up, businesses are awaiting the statement with trepidation.
At the forefront of businesses’ concerns will be the fact that September’s 6.7% inflation rate is set to be applied in full to the rate of the pound, raising the UBR from 49.9p to 53.2p. Those benefiting from 75% retail, hospitality and leisure (RHL) relief will also be pondering if it will remain, what the alternative could be or whether Jeremy Hunt (pictured) will cut their legs out from under them.
Yet, with the next election just 15 months away, implementation of the full inflationary increase looks unlikely, as the government will be keen to keep businesses on side.
The Budget is often characterised by assurances of short-term business rate savings, which tend to be empty promises. This is clearly not what businesses need. A clear roadmap that gives retailers time to act accordingly is crucial to their survival. With the election looming, it is unlikely the RHL relief will be removed, but businesses still need a sense as to timings, so they are not left in the dark.
While the Non-Domestic Rating Act is set to introduce changes that deliver on ratepayers demands such as more frequent revaluations, better information sharing and doing away with the ‘check’ stage of Check, Challenge, Appeal (CCA), it fails to address the crux of the issue: the UBR itself.
As the UBR increases, it gives a strong indication that commercial property values are not rising as fast as inflation. Reducing occupancy costs would encourage higher occupation of retail units and could assist with the bid to get workers back to the office.
The importance of harmonising the uncertainty of business rates is prevalent. The government’s reluctance to change business rates stems from the need to generate revenue. A reduction from 53.2p to 35p would leave a £9bn hole for the chancellor to plug.
A simple solution, albeit an unpalatable one with voters, would be a revaluation and reform of council tax, which would alleviate unpredictability for UK businesses.
Chris Grose, rating director, Hartnell Taylor Cook