Business rates fall for Big 4 grocers but rise for London businesses

The government’s recent business rates announcement has significantly reduced tax for UK supermarket chains even while raising them for businesses in the capital.

The Big 4 supermarket chains Sainsbury’s, Tesco, Morrisons and Asda could receive a £173m tax reduction on their larger stores starting 1 April 2017, according to the Retail Gazette.

Big brand superstores across England and Wales will on average see rateable values decrease by 5.9%, which is around £79,368.

Figures from the CVS reveal that the collective revaluation of supermarkets this year totals £2.76bn, decreasing from the £2.93bn valuation in 2010.

“With the loss of market share and the proliferation of new stores by the discounters, undoubtedly, this will be good news,” chief executive of CVS Mark Rigby said.

“However, the government’s proposals for transitional rates relief mean that those businesses expecting lower bills will only get those savings gradually – so firms will have to wait even longer for their long-awaited relief,” Rigby added.

Meanwhile the capital is getting the short end of the stick according to the London Evening Standard. According to the publication, London’s businesses will be forced to hand over an extra £4bn in tax over the next five years.

Experts warned that the rise in business rates could cripple small shops, bar and restaurants that are already suffering from high rents. The extra costs could then be passed on to consumers in the form of higher prices.

Head of business rates at consultants Gerald Eve Jerry Schurder said: “Yet again, the Government is treating London’s businesses as a cash cow. Even prior to the revaluation London paid far more in rates than any other region, but now firms in the capital have to find an extra £4 billion between them over the next five years; ultimately, it is likely to be customers that pay through higher prices.”

“The way rates are calculated has to be reformed or it will be the death knell for many independent businesses in London,” said Had of british Independent Retailers Association Vin Vara.

Rises will be phased in with a 45% ceiling in the first year and 50% in April 2018 for most firms.

A proposed “traditional relief” scheme, designed to limit any major changes to rates, could cap the rates at 4.1%.

The Department for Communities and Local Government (DCLG) said: “Firms need to be confident that the rates they pay are accurate and fair, no matter where they are in country, and these updates will give them that reassurance. Nearly three quarters of companies will see no change, or even a fall, in bills, including 600,000 who from next April will have their bills cut altogether.

For those ratepayers facing in-creases, London will benefit more than anywhere else in the country from the transitional relief scheme with almost £1 billion of support over the next few years.”

The DCLG added that more than 140,000 properties will benefit from transitional relief of which 100,000 were small properties.