Last week, 44 retail leaders representing one-third of retail in the UK penned a letter to chancellor Jeremy Hunt, calling for a freeze of the rates, expected to be announced later this year as part of the government’s autumn statement.
Without action, the multiplier will rise in April 2024, in line with September’s inflation figure – expected to be 6% – amounting to an overall increase of £400m a year to retailers’ business rates bills.
The letter reads: “Retailers have worked hard to absorb as much additional cost as possible amid record cost inflation over the past 18 months.
“Operating profit margins have significantly contracted as a result, as the Competition Markets Authority reported in July.”
A recent survey by trade body the British Retail Consortium (BRC) revealed that 68% of retailers were “very concerned” about the increase, and that all of them felt it would place some pressure on shop prices, with 69% claiming it would put “significant pressure” on the prices paid by customers.
In addition, all retailers surveyed noted that the rates increase would result in investment challenges, preventing them from exploring the possibility of opening new shops and warehouses.
BRC chief executive Helen Dickinson said: “The chancellor must freeze rates to help keep a lid on retailers’ already high costs. With shop-price inflation having eased for three consecutive months, it is vital that the government does not add to the cost burden and undermine this progress.
“A £400m rates rise will also cost jobs, harm the economy, and damage the vibrancy of our town and city centres. While other business taxes, such as corporation tax and VAT, rise and fall with the movements in the economy, business rates must be paid in full whether firms are making a profit or a loss.
“This makes business rates the difference between retailers being forced to close existing stores rather than opening new ones.”
The Fed’s national president, Muntazir Dipoti, added: “The Fed is committed to lowering business costs for independent retailers. While many members currently benefit from business rate relief, which means they pay little or no business rates, this freeze would help to reduce the impact of inflation and the economic impact that any potential rise would have on retailers.
“Business rates are a major issue for retailers. We have been calling for an overhaul of the system for years to give retailers greater financial security.”
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