Bookshops could benefit from business rates shakeup

A raft of changes announced in the budget could ease the heavy burden of business rates shouldered by independent and chain bookshops.

Presenting the budget yesterday (16th March), Chancellor George Osborne said that around 600,000 properties would benefit from paying no business rates at all in 2017-18 after he increased the rateable value threshold from £6,000 to £12,000. Meanwhile, properties of a rateable value of between £12,000 and £15,000 will benefit from “tapered” relief, Osborne said.

“This will reduce business rates for many small businesses – including some high street shops,” he added.

At the same time, the government announced that business rate burden would reduce further because they are set to follow the Consumer Price Index (CPI) instead of the Retail Price Index (RPI) as they do currently. However, this change won’t come in until 2020.

The Booksellers Association (BA) has campaigned hard for business rates to be scrapped altogether for small businesses, as well as business rates to follow CPI.

Tim Godfray, c.e.o. of the BA, said: “The BA has been lobbying government on the necessity for business rates reform for many years and we have stepped up this activity considerably in the last year, as this is a pressing issue for our members. When we surveyed our members in February 2016, we found that 88% did not believe that the business rates’ system was fit for purpose."

He added: "Therefore we are delighted that the government is finally addressing some of our key concerns... In particular, we welcome news that the Small Business Rate Relief has been increased and properties with rateable value below £12,000 will receive 100% relief."

However, Godfray said business rates should not be looked at in "isolation". 

"All the tax arrangements affecting business have to be looked at as a whole and overhauled," he said.  "So we are pleased that a Business Tax Road Map is being published by the government, but the devil will be in the detail.  And we will have to see during the next few days what that might contain”.

One bookseller, Jane Streeter from The Bookcase in Lowdham, Nottinghamshire, said those bookshops who benefitted from the announcement around business rate relief would be “delighted” because it was well-known in the industry that business rates are a crippling added tax for booksellers.

“It is a huge problem, a huge issue for booksellers,” she said. “The BA campaign very hard on this subject behind the scenes – I imagine there will be some very excited booksellers hearing this announcement.”

However, it in unclear how many bookshops will actually qualify for the 100% rate relief. A few independent bookshops The Bookseller has spoken to said their rateable value was above the £15,000 threshold.

Peter Donaldson from Red Lion Books in Colchester said: “Very sadly this won’t apply to me, as my rateable value is around £20,000. The main concern for me is that for the past two years we have benefitted from a reduction in rate relief, but as of April that is now ending, so ours will actually go up.”

It is also unclear if the changes to allow business rates to track CPI will definitely provide a benefit for chain retailers. James Daunt, m.d of Waterstones, said: "It will save us – one day – an inconsequential bob or two unless, of course, deflation takes hold in which case it will cost us."

He added: "Either way, it in no way addresses the fundamental flaw in a taxation system that penalises the high street so disproportionately."

Osborne also revealed that all schools would become academies by 2020 or have plans to by 2022. The government will also provide up to £285m a year to give at least 25% of secondary schools increased opportunity to extend their school day.

Stephen Lotinga, c.e.o of The Publishers Association, said he welcomed the Chancellor’s measured to help businesses, but warned about the impact on schools' budget to the announcements around education.

“Publishers, like other sectors, are operating in challenging times and any fiscal assistance from the government is good news,” he said. “The measures to create a more level tax playing field between international and UK companies were particularly welcomed.”

“However, while we of course understand the government’s desire to raise educational standards through expanded opening hours, this must be accompanied with the necessary additional funds to make it possible.  As our recent research showed, headteachers are already reporting that the financial squeeze will impact their ability to buy the resources they need to improve standards.  This new announcement shouldn’t create a yet further burden on schools budgets.”

Osborne also revealed anti-tax avoidance and evasion measures to raise £12bn by 2020 in his budget today.

The crackdown includes measures aimed at increasing tax take from multi-nationals, alongside increased civil penalties for tax evaders. The government is also going to raise £9bn by closing corporate tax loopholes and tax minimisation schemes,” Osborne said.

Corporation tax, meanwhile, will reduce to 17% by 2020. It was 28% at the start of the last parliament and 20% at the start of the current session.