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The UK’s biggest retailers, factories, offices and even hospitals face an estimated £1.6bn of extra costs from next year after they were excluded from a freeze on business rates in the Autumn Statement on Wednesday.
However, smaller and independent businesses will continue to benefit from the freeze, plus a 75 per cent discount on the rate, for a further year.
Rates bills for about 220,000 larger commercial properties, predominately occupied by retailers, will rise next year in line with inflation, amounting to £1.6bn a year in extra costs, according to real estate companies Gerald Eve and Altus Group.
Helen Dickinson, chief executive of the British Retail Consortium, which represents the retail sector, said the largest chains that provided “the lion’s share of employment, investment and low-cost essentials for customers” will bear the brunt.
A total of 43,160 large retail premises in England, with a rateable value above £51,000, will see their bills rise by 6.7 per cent next April, Altus Group said.
According to its calculations, the business rates bill for department store Selfridges will rise by £576,993 on top of the £8.6mn it will have to pay this year, while Harrods will have an extra £617,462 added to its £9.2mn bill for this year.
Alex Baldock, chief executive of electronics retailer Currys, called the rates situation “unfair” and said the system required a complete overhaul.
“If the government is serious about supporting businesses of all sizes, promoting growth and reducing costs for consumers, it must urgently address our outdated and unfair business rates system.”
Scott Parsons, UK chief operating officer of shopping mall operator Unibail-Rodamco-Westfield, called for the introduction of an online sales tax to “level the playing field between online and physical retailers”.
Simon Green, head of business rates at Gerald Eve, said the Autumn Statement had been designed “to win [the chancellor] plaudits for protecting businesses from rates increases whilst still raking in an extra £8bn in rates revenue [over five years]”.
The government has also rejected calls from UK luxury retailers such as Burberry, Mulberry and Harvey Nichols to reinstate VAT-free shopping for tourists but said it was open to more feedback about the benefits of the tax break.
Retailers have said that London risks losing out as a shopping hub to cities such as Paris and Milan, which do offer VAT-free shopping.
The government also announced a plan to try to speed up supplier payments. From April 2024, companies bidding for government contracts worth more than £5mn will have to demonstrate that they pay suppliers within an average of 55 days. This will reduce to 45 days in 2025 and 30 days “in the coming years”, the government said.
Tina McKenzie, policy chair at the Federation of Small Businesses, said this could “lessen the absolute stress and strain so many business owners face”.
Additional reporting by Michael O’Dwyer
