Business rates have created a very difficult environment for small and medium-sized enterprises. These fluctuating rates are constantly increasing pressure on brick and mortar stores, while simultaneously supplying online retailers with an easy advantage. With the rivalry between e-commerce and high street retailers at its peak, it’s become important to raise the game and push the country’s competitive edge.
According to research by Altus Group, the average rates bill for department stores in England and Wales has risen by 26.6 per cent in 2018/19, with large high street shops seeing their bills go up by 10.8 per cent. This will impact small businesses the most, where their limited turnover will be insufficient to offset financial distress caused by any rise in business rates.
Altus Group’s report urges the government to reform the process and relieve business rate strain from small business shoulders. While government intervention would indeed provide the necessary relief to the small business community, they can also make changes themselves.
At the Credit Protection Association, our debt recovery services free up cash flow that our Members have used to invest in new technology or renovations. This new cash can however also be used to repair holes in cash flow, either made by late payment or financial mismanagement, or by the devastating blow from business rates. The CPA collection staff purge finances of late payers and residual debt, and provide business owners with the financial power to offset even the most disruptive business rate shakeup.
Retailers say that without urgent reform, the higher rates could kill the high street.
A number of retail stalwarts, including Maplin, Toys ‘R’ Us and Poundworld, have gone into administration this year, while others — including Carpetright and Waitrose — have closed stores.
According to the Office for National Statistics, while total retail sales grew 1.4 per cent in 2017, online sales were up 12.1 per cent.
The government has promised to reform the levy but retail bosses say time is running out as the difference between operating from out-of-town warehouses and expensive town centres widens, and high street retailers see profits plummet.
Robert Hayton, head of business rates at Altus, said: “Traditional bricks and mortar retailing is property intensive, leading to a larger tax to turnover ratio and, if left unchecked, could lead to the substantial extinction of the high street.”