High Street Gloom Deepens as UK Business Rates are Revaluated
The UK high street has been struggling with many issues in recent years, from the rise in popularity of online shopping through decreased consumer confidence to wage bills rising as the National Minimum Wage increases. In the past couple of years, many have also been hit with a huge increase in liability for business rates, while many online retailers have experienced a much lower rise or even a decrease in liability. Experts warn that unless a rates reform comes into play, the high street as we know it may not have much of a future.
Commercial property owners and tenants can use the services of specialist business rates company RVA Surveyors on a No Reduction No Fee basis to discover if they are eligible for any form of reduction or rebate on their business rates bill.
Research performed by Altus Group suggested that the average increase in business rates liability for department stores was 26.6% across England and Wales in the 2018/2019 financial year when compared with figures from 2016/2017. The PDF attachment looks at the most recent business rates revaluation.
High Street vs. Online Retail
The research from Altus Group suggested that not only were high street businesses seeing huge hikes in business rates, but many online retailers were actually paying less this year than in 2016/2017. As an example, online fashion clothing retailer Asos has seen a reduction in business rates of 0.8%, while the three warehouses in Manchester belonging to Shop Direct had seen rates reductions of 2.5% and 2.4% in 2016/2017 and 2018/2019 respectively. Even where rates for online businesses have increased, these increases are tiny compared to what high street store owners are paying. The embedded short video looks at the estimated figures for online retailer Amazon.
Even some of the biggest high street giants are being forced to close some stores after the recent rates hike. Marks and Spencer, which as a company paid £184 million in business rates in the 2017/2018 financial year, is closing 100 stores nationwide, including its Covent Garden site after discovering the rise in rates liability would be nearly half a million on that store alone.
Waitrose and Carpetright are among the other companies that have closed stores over the past year, while companies that have long been features on the typical high street such as Poundland and Toys ‘R’ Us have entered administration. Government promises to look into a levy reform may be welcomed, but they may also prove too late for many businesses. House of Fraser, which has been in business since 1849, may struggle to stay in business long enough for any reforms to come into effect and has already agreed to close more than half of its stores.
Government Urged to Cut Rates
The government is being urged by retailers to cut rates before we lose our high streets after a recent report warned that more than 100,000 businesses are likely to face closure in the coming decade. In just the next twelve months there are predicted to be around 70,000 retail jobs lost, on top of the 20,000 jobs that have already disappeared this year. Retail is currently the UK’s largest employer in the private sector. The retail industry is being disproportionately taxed, say experts – the industry contributes to 5% of the economy, but pays almost a quarter of the total bill for business rates. The embedded infographic has some more facts about business rates for some of Britain’s best-known high street stores.