High Streets Initiative · 4 December 2017

Business rates burden caused six shop closures every day for seven years

Between 2010 and 2017, the number of shop closures in UK communities reached 15,856
Between 2010 and 2017, the number of shop closures in UK communities reached 15,856

New research has found that six shops were demolished or converted every day for the duration of the previous business rates regime, as the property tax burden became unsustainable for thousands of independent retailers.

After analysing official government data, ratings advisor Atlus Group found that 15,856 shops completely “disappeared” across communities in England and Wales from 2010 until April 2017.

According to Atlus Group, at the start of the government’s last Rating List in April 2010, the shop count stood at 430,360, with a collective rateable value of £7.86bn. At the start of 2017, the headcount of shops had dropped 3.68 per cent, with a combined rateable value of £8.14bn.

Demonstrating the environment retail owners are competing in, the overall rateable value rose by £286m despite the steady decline in shops.

Revealed: One business owner a week faces 90-day prison sentence for unpaid property taxes

Further enquiries from the Centre for Retail Research group have found that so far in 2017, 1,364 stores have been affected by retail insolvencies. The uneasy climate for UK retail is even visible at the top, with Thomas Cook and now Toys R Us announcing the likely closure of a further 75 shop closures between them.

As of the next revaluation in April 2018, retailers alone are facing business rates increases of £270m, according to the British Retail Consortium (BRC).

Our Bricks & Clicks video series is helping retailers strike a balance between growing a brand online and establishing a physical presence

Commenting on the loss of shops across UK communities, Alex Probyn, Atlus Group president, said the face of retail was in a period of inevitable change.

“The conversation now to be had, which is a difficult one, is how to level the playing field between bricks and clicks,” he said.

Sajid Javid, the government’s communities secretary, pledged before the Spring Budget to “level the playing field” between online retailers and high street shops, but the chancellor’s latest paper on taxing the digital economy failed to address business rates.

Probyn suggested the chancellor’s ambition to charge digital firms income tax was a flawed attempt at levelling the playing field between online and physical businesses.

He added: “Property taxes should be about physical property. It’s the wrong mechanism for taxing digital businesses. An online sales tax might be used to level the playing field, but it does not belong within a system based largely on rental values.

“An online sales tax, for example, should not be seen as a generator of additional income. But revenue could be ring-fenced and used to provide additional relief for traditional bricks and mortar retailers.”

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This article is part of a wider campaign called the High Streets Initiative, a new section of Business Advice championing independent and small retailers by identifying the issues that put Britain’s high streets under pressure. Visit our High Streets Initiative section to find out more.

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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