After a year of weathering the storm of increased costs from regulation changes, National Living Wage increases and Employer’s National Insurance contributions, local shops are now facing down another wave of cost increases on business rates. In April next year, the latest revaluation will come into effect, likely increasing the business rates bills of thousands of convenience stores across the country, coupled with the looming threat of a further reduction of the Retail and Hospitality Relief that was introduced at 100% during the pandemic, then reduced to 75% and most recently to a 40% reduction in rates bills this year.
For thousands of the smallest, independently run convenience stores, this won’t have been a concern up to now because they’ve been sitting under the £12,000 rateable value threshold where you start to pay business rates. But this could all change after the revaluation takes effect in April, as the Government is not currently planning to index the threshold against property values. This means that lots of retailers who were previously paying no business rates could be pushed into paying them for the first time, as well as many who get some form of relief being moved into a band where they receive no relief at all.
The outlook seems bleak, so what can be done? We’ve written to the Chancellor outlining a series of measures that would mitigate these increases if announced at the Budget in November. Firstly, government need to deliver on their new Retail, Hospitality and Leisure Multiplier by using it to the full extent of the powers given to it in legislation, which would mean reducing the multiplier by the full 20p. In practical terms, this would save an average sized high street convenience store several thousand pounds next year enabling to invest in their stores and managing rising employment costs.
Next, we need to make sure that fiscal drag doesn’t take hold of the small business rate relief thresholds and that they’re indexed against the rise in property values to ensure that those who receive relief now continue to do so next year. Failure to act on these thresholds would see the smallest shops, often in the most isolated areas, hit by increased business rates bills.
Thirdly, we are proud of the record that convenience stores have when it comes to investing in their businesses, but they shouldn’t be hit with higher rates bills soon after as a result. The Improvement reliefs in place for stores that invest should be extended from 12 months to three years to give businesses a chance to see that investment pay back. Finally, we know that convenience store retailers’ number one priority is making their business safer for themselves, their colleagues and their customers. But if a retailer improves their CCTV system, their rates bills go up as a result. This cannot be allowed to continue, so we’ve called for CCTV to be excluded from business rates altogether.
It’s pretty clear that the business rates system is being held together with string and sticky tape at this point, in desperate need of change to establish a fair playing field for businesses that trade on our high streets while ensuring that the online businesses who have seen massive recent growth pay their fair share. Successive Governments have spoken of the need for reform of the rates system, but as a zero sum game for the Treasury, a new system is a difficult equation to balance. We’ve called on the Chancellor to take action now to support local shops with their rates bills, enabling them to plan ahead and ultimately invest in their long term sustainability. If this Government is committed to growth, supporting retailers on rates can go a long way to achieving that aim.
