Home Fashion Industry Financial Sunak’s Budget Business Rate Discount “Is Not Enough”

Sunak’s Budget Business Rate Discount “Is Not Enough”


Chancellor Rishi Sunak today announced that businesses in the retail, hospitality and leisure industries will benefit from a 50% reduction on commercial rates, up to a maximum of £ 110,000, as part of the fundamental review of government trade tariffs.

He also said the government will make the business rate system fairer and more timely, with more frequent reassessments every three years, compared to the current five-year system. The new reassessment round will come into effect from 2023.

The planned increase in the multiplier will also be reversed. Commercial rates are currently calculated by multiplying the assessed value (RV) of a property by the relevant multiplier (or the Uniform Commercial Rate, UBR) and applying any relevant relief. The small business rate multiplier is currently 49.9 pence for every £ 1 of assessed value, and applies to properties with RVs under £ 51,000. The standard multiplier for properties with a motorhome over £ 51,000 is 51.2 pence.

“We were delighted to hear today’s government announcement of trade tariff cuts to stimulate economic recovery,” said Guy and Leeanne Hundleby, owners and co-founders of accessories brand Strathberry. .

“It will really encourage independent businesses like ours to invest more in opening new stores and increase their confidence in supporting an industry so badly affected by the pandemic.” It’s the economic relief we need for businesses to recover from the challenges of the past 18 months and thrive.

Helen Brocklebank, CEO of UK luxury agency Walpole, welcomed lower business rates

Helen Brocklebank, CEO of British luxury goods organization Walpole, said: “The Chancellor’s decision to halve commercial rates for the retail, hospitality and leisure sectors is very good news. and will be of great help to the UK luxury sector over the next 12 years. month. Luxury companies are doing everything possible to provide solutions to the problems they face.

“Before the pandemic, the sector exceeded the GDP [gross domestic product] growing each year, supporting more than 160,000 jobs in each of the countries and regions. With temporary support measures, the sector will recover and be an important generator of future growth for the UK [companies]. “

jace tyrrell headshot

Jace Tyrrell, CEO of New West End Company, welcomed the reform, but said corporate rates were still too high.

However, Jace Tyrrell, CEO of New West End Company, which represents West End businesses, said: “It is encouraging to see the Chancellor finally act on the need to reform the business rate system. Canceling the inflation-linked rise in the multiplier may ensure that rates won’t rise this year, but they are still too high.

“A 50% rebate for the retail and hospitality sectors will help some struggling businesses, but not all. By capping the 50% discount on high streets at £ 110,000, the benefit is of little consequence to inner-city businesses. For a store in West London Ultimately, this will result in a reduction of less than 1% of their business rate bills for just one year.

“This only results in a reduction of around £ 1bn each year on a £ 25bn business rate bill in England – the equivalent of a 4% cut. That is a long way off. of fundamental review and is a very disappointing long-term outcome to meet the government’s manifesto commitment to reduce the burden on business tariffs. “

Chris Sanger, head of tax policy at the audit firm EY, said: “With reassessments postponed every three years, the Chancellor has improved the system. However, beyond the immediate reduction, retailers still pay nearly five times as much in trade rates as their share in the economy. The half-price offer for next year will help, but does not solve the problem in the long run. “

Online sales tax

The government will continue to explore the arguments for and against a UK-wide online sales tax (OST), the revenues of which would be used to reduce trade tariffs for retailers with properties in England and with the ‘increase in global grants from decentralized administrations in the usual way, due to the explosion of Internet shopping during the pandemic. The government has said it will release a consultation “shortly”.

Then Asos and the British Retail Consortium (BRC) lobbied against an online sales tax, which they said should be passed on to consumers.

Company rates by number

  • Non-domestic rating income for 2019/20 was £ 25.3 billion
  • UK business rates are the highest property taxes in the OECD (Organization for Economic Co-operation and Development)
  • Retailers pay 25% of all commercial tariffs paid by UK businesses (largest single category for commercial tariffs)
  • Of the taxes paid by retail businesses, 42% are business rates
  • The government introduced a 12-month holiday on professional tariffs for retail, hospitality and leisure in March 2020
  • Vacant and rentable business premises in England were excluded from the business tariff holiday and charged £ 1bn in tariffs in fiscal year 2021/21

Meanwhile, the Chancellor has also confirmed that the UK’s National Living Wage, which applies to all workers over 23, will increase to £ 9.50 / hour from April 2022, this which represents a pay rise for millions of low-paid workers.

Ministers accepted the Low Pay Commission’s recommendation for a 6.6% increase of £ 8.91, which applies to workers aged 23 and over. For 21-22 year olds, the minimum will drop from £ 8.36 to £ 9.18.

Helen Masters, retail lingerie consultant and former owner of Pudding Lingerie, an independent in Windsor, said: environment.

“However, I think we need to take a longer-term view and see the increase in the living wage as a positive step for the fashion industry and especially for the face-to-face sales staff.

“Fashion retailers today need a reason to bring customers to the store and there are really only three options to get there: price, convenience and experience. For many businesses, the focus should be on creating a customer experience with the wow factor and that means having competent and motivated teams. We just can’t expect people to deliver the experience that modern retailers need to create if we don’t pay them the right amount. “

Jon Goodwin, chief financial officer of lifestyle retailer Weird Fish, agreed: “The increase in the national living wage is a positive step forward to help relieve cost of living pressures. Weird Fish has been paying the minimum living wage since April 2021 and does not use age brackets to lower the wages of young workers. “

Graham Griffiths, director of the Living Wage Foundation, an activist organization in the UK that aims to persuade employers to pay a living wage, said: “The past 18 months have been a perfect storm for workers and families, including including those in industries such as Costs like fuel and energy have risen, and many have seen household incomes drop, so it is positive to see a significant increase in the minimum wage from April 2022.

“However, the real living wage [a voluntary rate of pay that employers can choose to give to their staff, unlike the government-set National Minimum Wage] is calculated annually on the basis of coverage of living expenses. Next month, as part of Living Wage Week, new living wage rates will be announced, reflecting the rising cost of living that we are all experiencing. These rates will see a substantial gap between the real living wage and the government’s national minimum wage for next year.

“We all need a salary that provides a decent standard of living. If we are to recover and rebuild in the months and years to come – including in the fashion industry – we will need to see more employers. ‘commit to going beyond the government minimum Do the right thing now and commit to paying a real living wage. “