Shops on struggling High Streets to be denied a further £100 million in tax reductions as 18,000 jobs lost.
The 2017 Revaluation should have been good news for ratepayers in economically disadvantaged areas who saw their property values plummet but, during the fourth and final year of the business rates cycle, the design of the system will continue to have an acute impact on properties in areas where rents significantly declined.
Revaluations create winners and losers generating significant changes to tax bills with both large increases and reductions. Since 1990, successive Governments have provided financial assistance to ratepayers through Transitional Relief schemes which work by phasing in large increases in rates bills over a number of years, based on annual “caps” on the percentage by which an individual ratepayer’s bill can increase from one year to the next before the effects of inflation are taken into account.
The cost of that relief is paid by phasing-in large reductions in bills that other ratepayers would have enjoyed as a result of the revaluation. The relief is self-financing.
Altus Group says that, come 1st April for 2020/21, the net loss to the embattled retail sector will be £61 million with £38 million granted in relief through the capping of large increases whilst £99 million in tax reductions will be denied through the continual phasing in of large reductions in bills.
Under the 4 year tax cycle, the embattled retail sector is the biggest loser under the controversial scheme with £604 million being the net cost to the sector with £615 million being granted in relief to phase in large increases whilst £1,219 million was denied in large tax reductions according to the Altus Group analysis.
Large premises that saw property values plummet in 2017 will only see a real term fall in bills of around 13% by the end of 2021 under the scheme.
Robert Hayton, Head of UK business rates at Altus Group, a long term critic of the policy, says “the phasing in of large property tax rises is a good thing. It acts as an important shock absorber and allows businesses time to adjust to higher liabilities. Paying for that by denying the correct reduction on properties in areas where values are falling burdens those least able to afford to pay. It is a simple mechanism for balancing the cost of the scheme but it is also simply wrong and unfair. A small supplement on all bills would spread the burden equally. It would be an insurance premium against a sudden liability increases.“