The British Independent Retailers Association (BIRA) has welcomed yesterday's rates reform proposals by the Chancellor, saying the Budget delivered permanent changes to the way business rates are levied and that tens of thousands of small shops will be helped.
The association said George Osborne had taken heed of much of what it had been campaigning for since 2011. Shops with a rateable value (RV) up to £12,000 will now benefit from a permanent exemption, tapering away for RVs up to £15,000, and from 2020 rises will no longer be based on RPI but CPI.
BIRA had also called for a permanently graduated rate to make the tax more progressive; the lower multiplier will now apply for properties with an RV up to £51,000 - raised from £18,000.
The association also wanted the frequency of revaluations to be increased, to keep them in closer touch with the real economy. The Chancellor obliged by announcing the aim of reducing this to a widely-supported gap of just three years.
The Budget proposals will take at least 600,000 premises out of paying rates and benefit a further 250,000 above the threshold, says BIRA. This will help both the 64% of shops in England and Wales that have RVs up to £12,000 and those around the average RV of a shop, which is just over £27,000.
BIRA did, though, point out that the new thresholds apply from April 2017 and that in the meantime all shops with RVs below £50,000 will be worse off than last year as the Chancellor did not reverse his removal of the discount of £1,500.
And another retail expert warned that many smaller retailers are not out of the woods yet. Phil Mullis, partner and head of retail and wholesale at top-20 UK accountancy firm Wilkins Kennedy, noted that the reduced rates may mean increased profits, which are subject to 20% corporation tax. Therefore, smaller retailers need to be on their guard if they are to take advantage of the new business rate reforms.
"Retail is all about consumption, so it relies on growth in order to really thrive," he commented. "If consumers are feeling confident and they have a little extra spend in their pockets, then retailers will see the main benefits from that.
"The new business rates reform is very welcome news, but, as usual, the devil is in the detail. It will be interesting to see the long-term effects from the changes and how smaller businesses will benefit."