Commenting on today’s Budget from a retail perspective, Paul Martin, UK head of retail at KPMG, said:
“After considerable campaigning by the disgruntled retail industry, mention of business rates during the Budget was to be expected. Of course, the payment holiday announced by the Chancellor will be welcomed by those it benefits, but it does only apply to a very small proportion of players – those with rateable values of less than £51,000. It would also appear that hopes of a fundamental review will have to wait until the Autumn Statement. But for those running out of puff, that could well be too long. Indeed, KPMG analysis recently revealed that retail was the top sector for companies facing financial stress and distress.
“There’s no denying that smaller retailers are a vital part of the retail industry – often at the heart of local communities – but the survival of prominent high street names also represents a real concern in the current climate. For many of these players, rates are the largest operational expense they have to contend with. The amount of business rates they are paying – given their vast high street presence – is out of kilter with the amounts paid by online businesses who need only consider their warehousing and logistics real estate. Essentially, the more traditional take on retail is being penalised as things currently stand.
“We have to remember, retailers are mass employers in the UK and their survival has a very human impact in terms of both employment and the shape of our high streets. Some of the changes we are witnessing are the fallout of changing consumer behaviour, but retailers are also contending with a myriad of pressures, whether it’s Brexit uncertainty or the potential impact of COVID-19. The Fundamental Review of business rates to come will be the key focus for most. It holds the potential to rewrite the future of traditional retail in the UK.”
Momin Hayee, Director and Business Rates Lead at KPMG UK, added:
“Today’s Budget revealed a welcome doubling of the 50% relief scheme to all eligible businesses with properties of rateable values less than £51,000 and an improved £5,000 relief for pubs.
“While this will help a large number of businesses and will certainly help businesses with smaller footprints and relatively low rent locations, it represents less than a 5% reduction in the overall business rates burden.
“Although the extension of relief will be most welcome, it is only for one year with no real relief for the squeezed middle, who are largely backbone occupiers of high streets across the country.
“The next fundamental review of business rates, to be updated on in the Autumn statement, as well as the forthcoming consultation on transition arrangements in England, will be what really shapes the business rates environment for the medium term.”
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