High street retailers face an additional £125m to cover the hike in business rates looming in April, according to new figures published today by business rent and rates specialist CVS.
It added that over the five years of the new Rating List, high street stores will see their bills rise by £1.56bn out of the total projected rise of £2.26bn for the retail sector overall, through inflationary increases.
The average small shop would see rates bills increase by £3,663 over the period, the research found.
But it claimed the opposite was true for online retail giants like Amazon, Boohoo and ASOS.
The CVS analysis showed that the nine Amazon distribution centres in England and Wales would benefit from a £148,000 reduction in property tax liabilities this year, reducing their 2017/18 rates bill to £11.3m, despite annual sales in excess of £6bn.
It said online fashion retailer Boohoo will see its property assessment fall by 13% on its distribution centre in Burnley, whilst ASOS’s distribution warehouse in Barnsley, South Yorkshire, will see no change to its rateable value, although the retailer last week reported it expects annual sales to rise by 25% to 30%.
Distribution centres overall would only see a marginal 1.6% overall increase in property assessments, said the research, compared with an 8.4% rise for bricks & mortar shops.
“The government made all the right noises back in 2015 and small shops thought that the aim of the review was aimed at levelling the playing field with their online counterparts, but nothing materialised,” said CVS chief executive Mark Rigby.
“April will serve a ‘hammer blow’ to small shops, and the consideration should now be to ensure that they are in fact paying fair and accurate rates.
“It will also be interesting to see how bricks & mortar shops will compete with agile, online retailers, which aren’t battling against exorbitant rent and rates bills for the next five years.”
The figures came after former government high street tsar Mary Portas this weekend called for urgent action to overhaul the rates system. Speaking in the Telegraph, she said she had met with business secretary Greg Clark, calling on him to change the “ridiculous and catastrophic” system.
“Business rates are an unfit for purpose tax, which hits our independent entrepreneurs harder than it should,” said Portas. “With occupational costs tripling from April in some cases, these independents will be forced to shut down and their premises will lie vacant, or we’ll see the return of the clone high street.”
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