The UK Government has announced plans to help high street retailers by applying a higher rate of tax to large distribution warehouses used by ecommerce retailers such as Amazon.
The Chancellor of the Exchequer, Rachel Reeves, announced the plans in the recent budget, targeting properties with a ‘rateable value’ of over £500,000, which is based on an assessment of the property’s annual rent estimate.
The intention of the plan is to introduce permanently lower multipliers for retail, hospitality, and leisure (RHL) properties.
Small businesses will still struggle
Physical shops have seen a steady decline since COVID, with the equivalent of 38 stores per day closing so far in 2024, so this tax aims to ‘level the playing field’ by easing the burden of business rates on property-intensive sectors.
The reaction from the retail sector has largely been one of disappointment, with many pointing to the new 40% relief to RHL properties, which is actually a cut from the current 75% rate.
“Freezing the small business rates multiplier was a sensible move but the loss of the retail, hospitality and leisure relief will still see bills for shopkeepers rising. Business rates remain intolerably high for shops and the multiplier must be lowered to an affordable rate for all.” said Chair of the Shopkeepers Campaign Vivienne King.
Online retailers have seen a huge boom in sales since the pandemic, even continuing to see profits soar when physical stores reopened after lockdown. This has meant growth for brick and mortar stores has struggled, finding it difficult to compete with the convenience and low costs of online shopping.
Amazon, one of the UK’s largest retailers, reported a $33.6 billion revenue in 2023, and benefits from the current tax rate that favours stores with smaller physical presence, or whose land is often in cheaper areas outside of town centres.
Via Bloomberg
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