400 UK stores may shut if large shops forced into higher tax band: BRC

There are approximately 4,000 large-format retail stores with a rateable value of over £500,000. Like all of retail, these stores are already under pressure by soaring employment costs, high taxes and rising rates bills, which is why 1,000 such stores have closed over the last five years.

New BRC analysis shows that 400 large-format stores are at risk of closure, if they are included in the government’s new business rates surtax on premises with a rateable value over £500,000, the consortium said in a release.

The retail industry accounts for 5 per cent of the economy yet pays over 20 per cent of all business rates bills. This load is keenly felt by large stores (those with a rateable value of over £500,000), which pay around a third of retail’s total business rates bill.

Given the small profit margins that exist across retail (around 2-4 per cent for food), a significant rise in rates for large stores would force these shops to raise their prices, employ fewer people, or even close their doors entirely, BRC noted.

BRC anticipates that if all 400 at-risk stores were to close, up to 100,000 jobs could be lost and local councils’ business rates receipts from retail would fall by well over £100 million a year.

BRC called on UK finance minister to use the Autumn Budget to deliver this vital change without simply shifting the cost onto larger stores, which would be massively damaging to UK high streets.

This can be done without cost to the public purse, by removing those stores from the new higher business rates tax band and slightly increasing the rates to be paid by the remaining large properties like office blocks and other big commercial buildings, where business rates are a much smaller share of costs and the knock-on impact on jobs and prices is far lower, it added.

ALCHEMPro News Desk (DS)