Martin Hamilton – Retail Sector Specialist
Fiscal incentives must go ahead now (not wait for end of transition period)
The UK is navigating an uncertain Brexit transition period, that makes it essential the UK’s Retailers and Highstreets have support from fiscal incentives, to promote investment.
Despite the Confederation of British Industry (CBI) announcing a “welcome lift in business confidence” at the start of 2020, the Government must not neglect the needs of SME businesses, which form the backbone of the UK economy.
Business rates are placing an excessive burden on retailers with shops and, despite recent changes to the way rates are set, they are simply not affordable, particularly at a time when footfall on the High Street is declining.
With the recent change in Chancellor, there is a golden opportunity for Rishi Sunak to make reducing business rates a headline proposal in his first budget. Recognising that changes could take time to implement however, he could offer other incentives to help retailers in the interim. For example, he could encourage retailers to open up premises on the High Street by introducing a rates holiday of two to three years.
Small business rate relief
He could also look at extending the reach of Small Business Rates Relief by making it available to properties with a rateable value of up to £20,000 pa (up from £15,000 pa). As the average rateable value for property in England is currently above £20,000 (£64,000 in London), according to data published by the Local Government Association, this uplift would help more retailers.
The Chancellor could consider subsidising the property rent payable by start-ups and SME retailers for the first two to three years. This level of funding could be a true catalyst needed to support the growth plans in the early years; enabling the business to establish a profitable and sustainable future.
New revenue tax on online sales
Finally, the introduction of a new revenue tax on online sales is also a possibility and could help to address the disparity in operational costs that apply to on and offline retailers.
While it wouldn’t necessarily be a popular move for the growing volume of online-only and brick-and-click retailers, the introduction of a new revenue tax, equating to one per cent of annual online sales, should not be discounted. This could be a significant revenue earner for the Chancellor. The tax revenue generated could be used to help level the playing field for High Street retailers by funding fiscal incentives (as suggested above), as well as providing money for the governments Towns Fund, which assists local authorities in regenerating their High Streets to encourage footfall.