A 5p reduction in business rate multiplier will save convenience stores thousands of pounds per year which will help retailers invest in their businesses, ACS Government Relations Director Edward Woodall has said while giving evidence to a Committee of MPs in parliament today (11).
The Non-Domestic Rating (Multipliers and Private Schools) Bill intends to introduce higher business rates multipliers for the largest business properties (those over £500,000 in rateable value) and lower multipliers for retail and hospitality businesses. Following the Budget, the business rates discount for retail and hospitality businesses is reducing from 75 per cent to 40 per cent in April.
One of the considerations of the Bill is the level at which the new retail and hospitality multiplier could be set at. The small business multiplier is currently set at 49.9p, while the standard non-domestic rating multiplier is set is 54.6p.
During the evidence session, Woodall told the Bill Committee that to make a tangible difference to local shops and other businesses, the new multiplier should be set up to 20p lower than it is currently which would result in savings of thousands of pounds a year for essential retailers that could be put to use effectively.
ACS Government Relations Director Edward Woodall said, “The vast majority of convenience stores would benefit from the new retail and hospitality multiplier. For a retailer that sits just outside the threshold of small business rate relief at £15-16k rateable value, a 5p reduction in the multiplier would save them around £1,000 per year while a 20p reduction would save over £3,000 a year.
"This is a significant sum to help retailers invest in their business, either defensively on crime prevention and detection, or positively in their community.
"There are however thousands of stores that are dealing with increased costs in other areas of their business, particularly on employment, so for those businesses it is likely that the money saved on rates will go straight into keeping that store trading.”
ACS wrote to the Chancellor in advance of the evidence session outlining the costs that retailers are facing as a result of the measures outlined in the Budget. Overall, the convenience sector is looking at an increase in operating costs of around £666m, primarily in additional business rates, National Insurance contributions and National Living Wage increases.
During the evidence session, Woodall also highlighted the importance of discretionary rate relief for rural businesses, particularly those that are operating as the last local shop in that village or rural area.
Woodall said, “Reliefs for businesses that are trading in rural areas with communities that rely solely on them are extremely important, but it is challenging for the Bill to be able to address this effectively as there are often more differences within a region than there are between regions.
"We believe that the most effective relief for these businesses is distributed by local authorities, but we know that their budgets are extremely stretched, so it’s important that the Government looks at putting additional resources and trust in local authorities to deliver discretionary reliefs that support the last shop trading in rural areas.”
The full evidence session can be viewed here: https://parliamentlive.tv/Event/Index/00c3b9b6-dc01-4417-b66d-6e4493719c57
