Retail group calls on government to reduce the burden of business rates
Business rates have become unsustainable and must be lowered to allow companies to invest, a leading business group has told the government.
The British Retail Consortium (BRC) has warned chancellor Philip Hammond that property taxes need reform because they now represent a "disproportionate burden" to businesses.
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In 1990, business rates were set at a third of the rental value of a property. Now, businesses must pay out roughly half the rental value of the property they occupy in additional taxes. Commercial property taxes in the UK are now the highest in Europe, and across all OECD countries.
CityAM can reveal that Oxford Street retailers such as John Lewis, Debenhams and Top Shop are all facing business rate rises of around 45 per cent for the year 2017 to 2018. The British retail sector as a whole will have to pay £2bn more in business rates over the next three years.
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High property taxes put British businesses at a competitive disadvantage, despite the UK's low corporation tax rate, said Jim Hubbard, policy advisor at the BRC. For every £1 a business pays in corporation tax, it must pay £2.30 in business rates.
"[The rate] will surely go above that value in future…at some point, it will need to stop," Hubbard said. "Fundamentally, business rates are too high. Something will have to change."
The BRC has proposed that re-evaluations of business rates occur more frequently. Rates were re-evaluated for the first time in seven years in September 2016, and with rents sky-rocketing in London, businesses in the capital are being hit particularly hard.