Business rates bills for retailers, from distribution centres to shops of all sizes, across England are set to rise by a staggering £2.3BILLION over the 5 year life of the new Rating List say business rates specialists CVS, as speculation of price increases for customers and even more store closures grows.
The Government has now adjusted the Rateable Values of every business property in England and Wales to reflect changes in the property market. The new Rateable Value will be used to determine the basis of the tax calculation for rates next April.
The revaluation of business properties usually happens every 5 years but was controversially delayed by 2 years as a result of the economic downturn. The last revaluation came into effect on 1st April 2010 based on the property market as long ago as 1st April 2008.
However, according to a detailed analysis from CVS Surveyors, new Rateable Values published show that across the entire retail sector total Rateable Values have increased by over £757Million.
Their analysis shows that the 485,435 retail premises, which account for 26.15% of all properties liable for rates, had a combined Rateable Value of £15.43billion based on the last property assessment in 2010, which has formed the basis of rates bills for the last 7 years, but this has now increased to £16.19billion.
As a result, CVS Surveyors project that the amount payable, inclusive of inflation, represents a £465.79Million per year increase in tax when averaged out across the five year List.
The retail sector has paid £7.68billion in rates during 2016/17, and this is set to rocket over the next 5 years to £8.15billion per year on average.
Mark Carney, the Governor of the Bank of England, has already warned earlier this week that prices in shops would soon rise as retailers started to ‘pass’ on the near 20 per cent fall in Sterling since the referendum.
Retailers are already grappling with the new “national living wage” which came into effect in April, with the British Retail Consortium (BRC) suggesting that by 2020 retailers will have to find an additional £3billion a year to pay their staff.
From 6th April next year retailers – and all businesses with a wage bill of more £3million a year – will be subject to the new apprenticeship levy and will need to spend 0.5% of their total wage bill on the levy, which has been reported will cost “hundreds of millions”.
The Guardian has reported how the Chancellor is being urged to intervene as small businesses continue to struggle with the double whammy of a bigger tax bill and a weaker pound.
Mark Rigby, chief executive at CVS business rates specialists, said:
“The retail sector is facing a significant shift in structural dynamics, with most reporting “challenging conditions” ahead. A ‘pass’ in the fall in sterling will accelerate into next year hitting consumers where it hurts most; their pocket.
“Add to the mix the already “lethal cocktail” of the increased operating costs for the national living wage and apprenticeship levy, a near half a billion pounds increase in business rates per year, for the next 5 years, is simply unsustainable.
“Something will have to give; whether that’s store closures or even higher prices at the till.”