Colliers has warned any implementation of phased downwards transition in the next revaluation will stifle recovery in the high street and hinder the Levelling Up agenda.
“Conservative runners hoping to lead the party must uphold the Conservative party manifesto and bring in proper business rates reform,” said John Webber, head of business rates at Colliers. “And, on the immediate front, must commit to ruling out downwards transition following the next revaluation in 2023, if they are serious about saving the high street.
“While many of the candidates are throwing around tax cuts like confetti, all we are asking is they all commit to a revaluation and Levelling Up agenda that will provide the instant tax cuts they have all already committed to.”
Running a risk
Colliers said while much of the debate is based on a vow to cut taxes in the race to become next prime minister, references to business rates has been limited. It warned party hopefuls that ignore business rates run the risk of hindering any claims of reducing the tax burden, encouraging business growth or of supporting the Levelling Up agenda.
It added the tax has had a major impact on occupier costs, particularly in the retail and hospitality sectors and has compromised the viability of shops and jobs in the sector for several years, particularly in some of the poorest parts of the country.
Webber said: “After seven long years, we now have the rating revaluation in 2023 to look forward to – whereby rates bills should be based on rental values of 2021. In some locations, retail rental levels have fallen 50% or 70% since the 2015 valuation date for the current rating list and this should hopefully mean rates bills will come down dramatically for many in the sector. This drop will make a massive difference to a business’s running costs.
“[But] this will be meaningless if the Government does not allow business rates reductions to be implemented immediately rather than spreading them over the years of the list in a transitional arrangement, as it did in the last list of 2017.”
More frequent reviews needed
Colliers said downwards transition meant many businesses in these sectors have paid business rates that are too high, for too long.
Webber dismissed PM hopeful Jeremy Hunt’s plan to give a five-year business rates holiday for deprived areas as “unworkable” and would only add another layer of complexity to the issue.
He concluded: “If we had a revaluation every three years or ideally less and rate bills immediately reflected rental levels, we would not need any further complicated schemes such as this.
“Because the business rates tax take needs to be revenue neutral, we would just find the likes of Amazon would see increases in their rates bills to balance the reduction in retail rates. As this sector has been booming, it is only fair they take their share of the tax burden.”
