Independents have called for a temporary business rates allowance to support smaller retailers, as the Treasury committee develops a longer-term solution to the property tax crippling the UK’s high streets.
Members of the British Independent Retailers Association (BIRA) lobbied for a £12,000 temporary allowance on the rateable value of a property, similar to that which applies to income tax, at a meeting with the Treasury select committee and other industry stakeholders this week.
BIRA member and Lakeland Leather managing director Martin Foster, who attended the meeting, told Drapers: “Trying to reform business rates takes time, but what is needed is immediate action. The proposal of a rating allowance would take the pressure off smaller businesses.”
Attendees at the meeting also expressed concerns over the “check, challenge, appeal” system that was launched in 2017.
Sir John Timpson (left) and housing, communities and local government minister Jake Berry (centre)
Foster said: “It was met with complete hostility [from retailers]. It’s overly complicated. Some of the smaller retailers haven’t even heard of it or are nervous of using it because they don’t understand the intricacies of the system and may end up with a higher tax.”
More than 82,400 properties in England have lodged appeals against business rates since the overhaul, the government’s Valuation Office Agency (VOA) reported. This is a 78% drop from the 371,250 appeals lodged in the two-year period following the 2010 revaluation.
A suggested longer-term solution to business rates was a corporation tax graded by profits.
“If you’re no longer paying business rates, then your profits would be higher,” said Foster. “If that means we have to pay a higher rate of corporation tax, at least that is a fair system. The entrepreneurial spirit within retail will come forward again. At the moment myself and many business owners are disincentivised from taking space or investing to improve existing high streets because we’re hit with large business rates.”
Altrincham has taken the lead to promote partnership between councils, government, local businesses and communities.
On 17 May, the town in Greater Manchester was the first to pilot “National High Street Perfect Day” – a scheme recommended by Sir John Timpson in his The High Street Report, published at the end of last year.
The local community, schools, Trafford Council and the companies represented by business improvement district (BID) Altrincham Unlimited organised events such as street clean-ups, social media workshops and fashion shows throughout the day.
Independents in the town felt an immediate impact from the event.
“We had the busiest weekend we’ve had this year in terms of sales,” said founder of womenswear boutique Laundry B, Laura Warburton-Fox. “Retail is really tough at the moment and it’s imperative that we all work together to keep Altrincham on the map.”
Kate Proctor, founder of sewing studio Sew Creative, said: “The government should be seriously looking at the potential of small businesses. We went from being the worst high street in Britain to the best, because of what the BID team has done.
“If I hadn’t have got rate relief I wouldn’t have opened on the high street in Altrincham – it would have crippled me. The more government can help small businesses flourish, the more it helps the economy.”
Foster was encouraged that the Treasury committee had taken the concerns raised seriously: “I believe there’s a better understanding of the issue. However, if action isn’t taken quickly, we’ll continue to see a downward spiral. For my own business I pay just over £500,000 in business rates and my payroll is £1.5m. It’s the equivalent of employing something like 30 council workers.”
“Wouldn’t it be nice if [the government] did something positive for businesses and took the pressure off?”
The Treasury committee inquiry is still ongoing.