The UK government’s new approach to business rates is set to benefit big retailers in the country. The Draft List for the 2023 Revaluation, which aims to address the challenges faced by the retail industry in recent years, shows that retailers will see a boost in their rates bills. Unlike other sectors, the retail sector has experienced an average decrease of 10% in Rateable Value (RV) in the new list, which is a positive development for retailers.
Furthermore, the decision to freeze the multiplier for large and small businesses at 51.2p and 49.9p respectively is also good news for retailers. This freeze means that retailers will see a reduction in their rates bills starting from April. The removal of ‘downwards transition’, as announced in the Autumn Statement, is another benefit for retail occupiers. Instead of gradually paying lower rates for their stores, they will immediately benefit from the lower rates.
Property specialist Colliers predicts substantial business rates reductions across England and Wales, not only in high street locations but also in retail parks, shopping centres, and out-of-town locations. Some areas may experience RV reductions of up to 30% or 40%. This change is expected to have the biggest impact on large department stores and hypermarkets. For example, on Oxford Street in London, RVs have fallen by approximately 30%, with some stores seeing even greater reductions. Selfridges’ RV dropped by 45% from £30.5 million to £16.8 million, while Harrods in Knightsbridge saw a reduction from £32.7 million to £16.8 million. As a result, the rates bills for these stores will also decrease by 45%, with expected amounts of £8.6 million and £9.2 million respectively.
Other areas in the UK have also witnessed significant decreases in RV. Market Street in Barnsley Town Centre, for instance, saw values fall by 47% on the new rating list. However, logistic hubs experienced increases of up to 48%, which may impact online retailers with physical stores that have successful online operations. For example, the rateable value of Amazon’s warehouse in Tilbury, Essex, rose by 74% to £12.3 million.
Despite these increases, there will be upward transitional relief caps in place to support ratepayers who face significant bill increases following the Revaluation. Overall, the government’s new approach to business rates promises to be a positive development for big retailers in the UK, providing them with much-needed relief and support.
Useful links:
1. Government guidance on business rates revaluation 2023 for retail occupiers
2. Colliers’ insights on the impact of business rates revaluation on the retail industry
