Real estate adviser Altus Group has calculated that high street properties with a rateable value below £51,000 will benefit from a half-a-billion-pound discount following the Government's business rates discount scheme.
The one third discount was unveiled by Chancellor Philip Hammond in his Autumn Budget alongside the 4.9% increase in the national living wage for workers over the age of 25 from £7.83 to £8.21 – which also comes into force today.
Breaking down the figures, the Altus Group revealed that the average high street pub will save £6,052 under the discount scheme while the average shop and restaurant will save £3,292 and £7,212 respectively as a result of councils in England setting aside £502m this financial year to cover the cost.
However, according to Robert Hayton, head of UK business rates at Altus Group, councils in England are still expected to collect £25bn in business rates during the 2019-20 financial year – an increase of £206m – with the standard rate of tax going above 50% for all medium to large-sized premises, the highest rate since the national business rates system was introduced in 1990.
As reported by The Morning Advertiser in November, the Altus Group estimates that more than 5,000 pubs could be worse off as a result of the Chancellor’s 2018 Autumn Budget.
Analysis of Government data by the real estate adviser revealed that 5,520 medium-sized pubs, those with a rateable of more than £51,000 but less than £100,000, will see their collective business rates bills rise to £192.21m.
Still need for urgent reform
However, according to research from UKHospitality, accommodation businesses will miss out on business rates relief to the tune of £73m while also being among the hardest hit by the annual rates increase.
UKH revealed its findings in response to the Treasury Committee inquiry into business rates while calling for the appointment of a Royal Commission to reform rates in the context of the wider business taxation system, with consideration given to moving away from a property-based tax system; Government reconsideration of the application of State Aid rules that restrict the number of business that can benefit; and for reliefs to be more targeted on sectors that currently overpay.
The industry body’s figures, which claim that the hospitality sector collectively pays more than £3bn in rates per annum – an overpayment of £2.4bn when weighed against its economic activity – finds that Britain’s hotels, hostels and guest houses will be stung by an annual rates increase of £27m.
“Today may be April Fool’s Day but for thousands of the UK’s world-class businesses in our sector, business rates are no joke,” UKHospitality CEO Kate Nicholls said.
“These companies are in urgent need of help from the Government; they are increasingly struggling from the effects of a disastrous rates revaluation and an archaic tax system that is shutting down the UK’s growth engine and threatening the millions of jobs they support in communities up and down the country.
“Business rates are outdated and urgently require reform. We are calling for a Royal Commission – a major formal public inquiry – such is the importance of this critical issue to the future health and prosperity of the UK’s high streets.
“The Government must act to make the system fit for purpose in the 21st century.”