New year, new start? At the beginning of the year you may have been one of the many who made a new year’s resolution to eat healthily and get fit.
The Government has also joined in. Plans were originally announced back in the Chancellor’s Autumn Statement to invigorate the high street, giving struggling retailers and small businesses a much needed boost through the following measures:
- Business rates relief by offering a discount of up to £1000 off rates bills for businesses occupying premises with a rateable value of up to £50,000 – this measure has now been implemented for 2014-2016 following Eric Pickles’ announcement at the end of January 2014
- The introduction of reoccupation relief in relation to vacant premises giving new occupants of previously empty retail premises a 50% reduction on business rates
- Allowing businesses to pay their rates in 12 monthly instalments, rather than 10
- The cap (but not freeze) of 2% on this year’s rates increase
- Reforming business rates at the next revaluation of Britain’s property in 2017
Cap the calories, cap the rates?
Behind rent and staff costs, business rates are one of the largest expenses for businesses. The rates are based on rateable values of business premises, set by the Valuation Office. The revaluation usually takes place every five years and the next valuation is due in 2017 in England. Although the cap limits any potential increases, discrepancies remain over annual rents and rates bills. While shop rents in much of the country appear to have decreased, rates have increased as a result of inflation. Frustrated retailers are therefore calling for a revaluation of rateable values.
The gym effect:
With the new year came sales promotions and gym memberships grew but will retailers storm the 50% business rate relief sale and rent vacant stores quite in the same way? Figures reveal that around a third of the UK’s 35,000 empty shops have been vacant for well over a year, but will the sale tickets be enough to breathe life back into the high street?
Staying strong or allowing a cheat day?
The Government’s changes allow new lettings not only to be secured at lower rents than those of their neighbours but also to benefit to a greater degree from the above measures. This will undoubtedly cause mixed feelings for those tenants locked into leases and unable to capitalise on the additional benefits of the overhaul. They may well feel their new year’s diets aren’t paying off, as they watch others having their cake, and eating it too.
George Osborne has recently said the Government will look to reform business rates at the next revaluation of Britain’s property in 2017. One option is to replace it with a ‘sales tax’ so that online and high street retailers are treated equally.
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