The Budget has delivered permanent changes to the way business rates are levied and is set to help jewellers and other high street retailers across the country.
Chancellor George Osborne announced yesterday that the government will double the Small Business Rate Relief (SBRR) from 50% to 100% and increase thresholds.
This means that businesses with a property with a rateable value of £12,000 and below will receive 100% relief, while Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief.
There will also be an increase in the threshold for the standard business rates multiplier, meaning properties with a rateable value of £51,000 and below will not be responsible for paying the 1.3 supplement that is used to fund the current SBRR scheme.
The announcement will take 600,000 premises out of paying rates and benefit a further 250,000 above the threshold, according to the British Independent Retail Association.
Alan Hawkins, bira CEO, commented: “The government has listened to businesses and in particular to the High Street shops whose business rates pain first alerted everyone to the damaging effects of this outdated tax. These changes go a long way to alleviating that pain in the longer term and bira welcomes that.”
Taxes for all rate paying businesses will be cut through a switch in the annual indexation of business rates from RPI (Retail Price Index) to be consistent with the main measure of inflation, currently CPI (Consumer Price Index).
Gavin Matthews, retail expert and partner at Bond Dickinson said: “[Tthe Chancellor] has finally linked the increase to the Consumer Price Index rather than the Retail Price Index which means that there will be a benefit for bricks and mortar retailers.
He has raised the threshold for small business rate relief which means more than 600,000 small businesses will not pay business rates. He has also confirmed that revaluations will be more frequent – every three years.”
Helen Dickinson, chief executive of the British Retail Consortium said: “Taking small businesses out of the business rates system; switching the annual indexation to CPI and moving to more frequent revaluations are all welcome moves towards fundamentally reforming the business rates system.
“The budget was recognition that the system is no longer sustainable and is in desperate need of fundamental reform.”
On the flip side, the CPI change is not scheduled to come in to force until 2020, so retailers are going to have to wait for at least three years to see any benefit.
“CPI will apply to uplifts from 2020 – this could and should have been applied now,” said bira in a statement, adding: “The new thresholds apply from April 2017 and in the meantime all shops with RVs below £50,000 will be worse off than last year as the Chancellor did not reverse his removal of the discount of £1,500.”
Dickinson agreed: “Retailers will have noticed that any of the intended support will not be felt for another year and more.
“I would encourage the government to maintain its level of ambition of reform and look at reducing the multiplier as soon as possible. This is a tax after all, which when it rises next month, will be at nearly 50% of annual rental values.”