Chancellor Rishi Sunak announced a 50% reduction in business rates in a tax cut worth £1.7 billion as part of a package of measures aimed at retail to boost post-pandemic recovery.
Any eligible retailer will be able to claim a temporary discount on their bills of 50%, up to a maximum of £110,000 in the 2022-23 tax year.
In conjunction with the existing Small Business Rates Relief, the chancellor said the move meant more than 90% of all retail, hospitality and leisure businesses would see a discount of at least 50%.
The government is also freezing the business rates multiplier for another year (22/23), saving ratepayers £4.6 billion over the next five years and promised the introduction of a new revaluation cycle that will be delivered from 2023.
There will also be a new ‘business rates improvement relief’ – from 2023, firms will be able to make property improvements, and, for 12 months, pay no extra business rates; ; and there will be further investment relief to encourage businesses to adopt green technologies like solar panels.
But the announcement falls short of the major overhaul of the business rates system that the sector has long been calling for, not least to redress the imbalance between business taxes paid by online retailers compared to high street stores.
“The decision by the Chancellor to continue to avoid imposing any kind of tax on the e-commerce sector is another blow, as bricks and mortar retailers continue to operate on an uneven playing field,” commented Scott Parsons, head of the Westfield shopping centres group.
“Of the £7.9bn that was raised through retail business rates in 2019/20, just over 5% was raised from online retailers who at the time represented approximately 25% of sales. We challenge this government to be brave and smart enough to come up with a solution, so our high streets don’t have to shoulder virtually all of the tax burden for the retail industry and online pays its fair share.”
Helen Dickinson of the British Retail Consortium commented: "“It’s a mixed bag of announcements from the Chancellor which falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.
“With firms still stuck on property valuations from 2015, the move to a three-year revaluation cycle, supported by a properly funded VOA, is welcome and is a clear acknowledgement that rates have fallen well out of kilter with the wider property market. The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50% in England – is already far too high," she said.
Vivienne King, chair of the Shopkeepers’ Campaign, said there was disappointment “that there is no commitment to annual revaluations so that tax bills reflect the market property values.”