Fears mount for retailers as councils admit issues ahead of April tax cuts

april tax cuts
// Fears grow over April’s high street tax cuts for retailers as councils admit problems
// Thousands of retailers that applied did not get their discount even though they’re eligible
// Meanwhile, countless others have not yet even applied

Retailers were promised millions of pounds in support by the Chancellor last October but with the new financial year just weeks away, many are still either waiting for their discounts or haven’t even applied, according to a leading real estate adviser.

The government announced a business rates discount scheme for small-sized high street properties in England which have a rateable value below £51,000 at the 2018 Autumn Budget.

Under the scheme, qualified retailers were in line to receive a one third discount from their bill in the 2019/20 and 2020/21 years.

When Chancellor Philip Hammond announced the measures, he said it would help “up to 90 per cent of all independent shops, pubs, restaurants and cafes”.

However, according to Altus Group – which specialises in commercial property and business rates – over 1000 retail premises in the City of York eligible for the discount have received their new tax demands without the discount being applied.

They were also reportedly told that the council was awaiting for software to allow them to calculate and apply the discount.

Meanwhile, Richmond Council has seen just 400 business premises apply for the new relief scheme, out of 1250 identified as being eligible.

Altus Group also found that although the council in Leicester were helping 932 small retail premises, they said “the majority of eligible businesses will automatically receive the discount without having to apply for it, although businesses with multiple properties will need to apply to ensure the discount doesn’t exceed European state aid limits”.

Altus Group head of business rates Robert Hayton said these cases had a sense of deja vu, referring to 2017 when the government had to step in and name and shame councils failing to pass on £300 million in discretionary relief to help those businesses adversely affected by the revaluation.

“Councils should apply the discount automatically to those premises not part of a chain and unlikely to be impacted by State aid rules whilst bills could have been manually adjusted to avoid the uncertainty and subsequent cost of rebilling,” he said.

The Local Government Association said they were aware of the issues, but conceded that software suppliers have been very slow with their updates.

“Different authorities will have different approaches – some will send it out automatically and wait for businesses to tell them if they are non-eligible and others will wait for businesses to apply,” a spokesman said.

“It is up to councils to establish eligibility.”

The standard tax rate, which applies to all medium and large premises in England with a rateable value over £51,000, and precluded from the new discount, will rise by 2.4 per cent to 50.4p in England on April 1.

It will be the first time the tax rate for business rates in England will have gone above 50 per cent.

Altus Group said it would add an extra £127.88 million to the rates burden in inflation for the retail sector.

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