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Retailers ‘losing’ shop floor space to qualify for business rate relief

It seems retailers are having to become ‘creative’ to find ways to qualify for the various business rate relief schemes currently on offer.

Reports are surfacing of small retailers looking to abandon or even “lop off” shop floor space, in order to fall under certain thresholds of rate relief.

Joe Williams, owner of The Village Shop in Hook Norton, Oxfordshire, told Retail Express: “I’m now having to decide whether to lop off 100 sq. ft from my shop floor in order to fall under the £12,500 rateable value for rural rates relief and save £6,000. The Government should be encouraging growth, this is the opposite.”

It is these kind of individual case studies that have helped persuade the Treasury Select Committee to demand urgent action to reduce the business rates liability of small shops.

A report by the group of MPs said the current system: “damages the competitiveness of shops” because online and out of town retail fail to pay their fair share of business rates, putting an unfair burden on normal retail outfits. However, they fail to recognise the relationship between rent and rateable value…

Bricks and mortar retailer woes are in sharp contrast to online or high street giants, with latest figures seemingly rubbing salt in the wounds. Recent research published surrounding the 2017 revaluation claims that Amazon and Tesco alone will save over £100m but an “average” small shop will pay an extra £3,663. But the research does not comment on the thousands of properties that have been taken out of rating. Perhaps it is time to examine the plethora of reliefs and the complexity of transitional adjustments and then simplify, ensuring that everyone just pays their fair share. There are some good points in Ken Barclay’s review of the Scottish system – here.

As well as trying to get Government to step up and help the retail sector, the Treasury Select Committee is also on to the Government to “urgently investigate” how to make rating revaluations more frequent before the planned 2025 change to a three-year cycle.

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