Business rates relief merely a ‘sticking plaster’

Leading electrical retailers have slammed the changes in business rates relief, claiming that the system needs a complete overhaul.

Hughes managing director Robert Hughes argued that the business rates announcement in the Budget earlier this month was just a “sticking plaster to a broken system”, which has been unfair to retailers for many years.

“I am less concerned about the 2017 revaluation, despite having a shop in Southwold that suffered the worst uplift of nearly 200 per cent. This was balanced by as many fallers elsewhere,” he said. “The inequity is how little is paid by other industries that are more land-hungry or polluting than ours. We must keep a fundamental reform of the rates system high on the agenda if and when we speak to MPs.”

Robert Hughes
Robert Hughes

According to Paul Mead, managing director of Michael R Peters in Bedford, business rates continue to be an unavoidable overhead that is “inequitable and out of date”.

“Rateable value is based on an estimate of the annual rental value of the property in question, which always raises the question as to who decides what the market rent should be?” Mr Mead said. “There are so many empty retail units in my neck of the woods that it could be argued that the rents being offered or charged are too high, thus bringing the whole basis of calculation into question.”

Currently, a small business is defined as one that operates from a property with a rateable value below £18,000. The business rate relief that comes into effect in April, will see companies with a rateable value below £12,000 pay nothing in business rates. Those valued between £12,001 and £15,000 will receive a tapered relief.

Paul Mead
Paul Mead

However, protests from the small business sector and its associated trade organisations, has seen the rate relief exemption double, from £6,000 to £12,000.

Mr Mead revealed that he will see a 9.7 per cent increase in business rates on the previous year, as well as a 17 per cent increase in the rateable value of the property.

“It seems very complicated and although we seem to have come out of it reasonably well, I stand by my comments and conclude that the current method of calculation is too complicated and the whole system needs a major overhaul,” he concluded.