Monday, 20 February 2017

UK Supermarket Chains To Receive A £200M Business Rates Cut


Britain's out-of-town supermarkets are in line for a £200million business rate cut – even though small high street stores face closure, according to latest figures.

The largest superstores and hypermarkets expect a 1.7 per cent reduction when rates are revalued in April.

But smaller high street retailers will be charged an average of 3.7 per cent more, costing them tens of millions of pounds, analysis shows.

Experts said the figures showed the madness of the business rates shake-up when town centres are already being hammered by competition from out-of-town supermarkets.

It also emerged last night that superstores – most of them operated by the so-called Big Four of Tesco, Sainsbury’s, Asda and Morrisons – had benefited from the decision to delay the shake-up by two years thanks to a fall in the value of out-of-town retail centres.

Had the revaluation been carried out in 2015, their bills might have been £1.3billion higher.

It comes a week after it emerged that Amazon will benefit from business rates cuts despite the fact that the online retailer is also putting the high street under pressure. An analysis by rent and rates consultancy CVS looked at the largest 2,200 supermarkets – those with a floor space of more than 2,500sq metres.

These have seen a fall in property value of 5.7 per cent, which will feed through into a business rate cut of around 1.7 per cent on average.

This is equivalent to £39million a year less in business rates paid – or almost £200million by 2022.

However, for the 400,000 small shops in England and Wales, there has been an 8.5 per cent increase in property values.

This will lead to a 3.3 per cent increase in business rates charged, or £124million next year – more than £600million extra in rates over the next five years.

The news will increase pressure on the Chancellor to use next month’s Budget to mitigate the effects of the first revaluation in seven years.

Communities Secretary Sajid Javid, who is responsible for business rates, insists that the system is fair, with most businesses seeing a reduction or a freeze in how much they pay.

But Alan Hawkins, of the British Independent Retailers Association, said: ‘We are hearing horror stories of rates going up 40 per cent. It could put people out of business. The problem is they can’t just shut up shop because they are tied to leases they can’t walk away from.

‘The rates system isn’t working. We need radical reform or the decline of high streets will only continue.’

Ministers are facing a revolt from Tory MPs, peers and business groups over the rates revaluation.

More than 500,000 small firms, including shops, cafes, restaurants, nurseries and B&Bs will be hit with increases of up to 300 per cent.

Mike Cherry, of the Federation of Small Businesses, said: ‘The revaluation is only now revealing a mountain of anomalies. Small businesses with premises and low profits are being unfairly targeted, while large firms nearby pay less per square metre.

‘This distortion affects small firms right across the economy.’

However, Sainsbury’s said its rates bill would rise thanks to all the smaller convenience stores it owns.

Chief executive Mike Coupe said: ‘There is an advantage for those without bricks-and-mortar operations, so there’s a strong case for a level playing field in business rates.’

Ministers have 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 in April.

CVS chief executive Mark Rigby said: ‘April will serve a hammer blow to shops and pubs.’



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