Business rates latest 4th September 2013

The British Property Federation (BPF) today backed veteran retailer Bill Grimsey’s call for a ‘root and branch’ review of business rates, as analysis of European Union data revealed the UK pays the highest business rates of any country in Europe, and more than France and Germany combined.

The BPF’s analysis of EU data shows that, as a proportion of GDP, UK business rates are more than three times those in France, and more than five times those in Germany. In cash terms, the UK Exchequer generated nearly €35bn from business rates in 2010, more than France (€15bn) and Germany (€12.5bn) combined. The analysis also shows:

• France takes the equivalent of 2.3% of its GDP in ‘recurrent’ property taxes (business rates and council tax). However, separate data reveals that only 23% of this comes from non-domestic property (equivalent to 0.5% of France’s GDP).

• Germany takes the equivalent of 0.5% of its GDP in recurrent taxes, with 60% of this classified as non-domestic (0.3% of GDP).

• The UK’s income from recurrent taxes is by far the highest in Europe at 3.4% of GDP, with business rates accounting for nearly half of this (1.6% of GDP). Bill Grimsey, former chief executive of Wickes and Iceland, today published his ‘alternative review’ of the high street, in which he recommended:

• Reintroduce immediately the 2015 business rates revaluation to realign property values and freeze business rates from 2014.

• Once revaluations have taken place any future increases should be an annualised CPI rate rather than a one-month snapshot.

• From 2017 revaluations must be conducted annually.

• Any business occupying a retail property in the retail core of a town centre that has been vacant for 12 months should receive 50% rate relief for two years.

• There must be a political will and determination to reduce property taxation once the Government’s fiscal debt consolidation plans have been fully implemented.

• The business rates system needs a root and branch review to establish a flexible system that will reflect changes in economic conditions as they occur.

Liz Peace, chief executive of the British Property Federation, said: “The Government makes a great play of claiming that it wants to create an internationally competitive tax system while at the same time hamstringing the nation’s businesses with the highest rates bills in Europe – bills that are ratcheted up with inflation each year regardless of wider economic conditions. “We’re pleased to see that Bill Grimsey recognises the damaging impact this has had on UK high street, and we would urge the Government to commit to a root and branch review of the current business rates system, the way it is calculated and charged, and the distortions it creates.”