Large-format stores could be hit the hardest if the UK government moves them into higher business rates tax band. And this could result in a wave of closures, according to the British Retail Consortium (BRC).

New analysis by the BRC shows that 400 large-format stores out of 4,000 in the UK are at risk of closure if they’re included in the government’s new business rates surtax on premises with a rateable value over £500,000.

The threat has prompted Primark, one of the UK’s biggest large-format store retailers, to also warn the government that proposed business rates changes are “mistaken” and heap pressure on big stores on UK high streets.

George Weston, the boss of Primark parent Associated British Foods, told the PA news agency: “Increases to labour and packaging have already had an impact and it is important not to make it harder for businesses looking to invest and create jobs. My message to Government is that that should not increase taxes on businesses any more.”

The BRC said large-format stores are already pressured by soaring employment costs, high taxes, and rising rates bills, “which is why 1,000 such stores have closed over the last five years”.

It said: “The retail industry accounts for 5% of the economy yet pays over 20% of all business rates bills. This load is keenly felt by large stores (those with a rateable value of over £500,000), which pay around a third of retail’s total business rates bill. Given the small profit margins that exist across retail (around 2-4% for food), a significant rise in rates for large stores would force these shops to raise their prices, employ fewer people, or even close their doors entirely”.
 
The BRC anticipates that if all 400 at-risk stores were to close, up to 100,000 jobs could be lost and local councils’ business rates receipts from retail would fall by well over £100 million a year.
 
It added: “The Government knows high streets are in trouble, which is why it is introducing a new permanent reduction in business rates for retail, hospitality and leisure (RHL) premises. This will replace some of the previous reliefs available to RHL premises, and will be funded by the new, higher business rates tax band on large properties”.

Instead, the body’s calling on the Chancellor to use the Autumn Budget “to deliver this vital change without simply shifting the cost onto larger stores – which would be massively damaging to our high streets”.

It says this can be done without cost to the public purse, “by removing those stores from the new higher business rates tax band and slightly increasing the rates to be paid by the remaining large properties like office blocks and other big commercial buildings, where business rates are a much smaller share of costs and the knock-on impact on jobs and prices is far lower”.
 
BRC CEO Helen Dickinson added: “Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafes, restaurants and smaller and independent shops.  After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities. Four hundred more large stores could disappear if the Government forces them into its new higher tax band. This would mean less revenue for the Exchequer.