Andy Jones, partner, retail indirect tax keader at EY UK, comments on the retail measures announced in the Chancellor’s Autumn Budget: “For retailers, the bottom line is that today’s Budget will likely result in increased cost pressures amid what is already a challenging backdrop. A particularly significant headline, as expected, is the proposed increase in the national minimum wage and National Insurance Contributions (NICs) for employers. Whilst good news for workers, this will impact retailers during a time of already-intense cost pressures.
“Moreover, whilst the announcement to ease the removal of the business rate discount will be welcome news for some businesses, it will still be an increase on the amounts paid today. That said, many may be hopeful that it is a first indication of the new Government’s approach to taxation and an indication that further reliefs that may come in the future. Therefore, overall, whilst the freeze on fuel duty and the reduction in Alcohol Duty rates for draught products will be welcomed, the Budget will likely lead to increased inflationary pressures for retailers and likely price rises for consumers.”
Chris Sanger, EY’s tax policy leader, added: “Business Rates is an area that governments have struggled with for at least the last decade. This is a tax that is paid regardless of whether a business is in the red or the black – whether there are profits to fund this tax or not. We have seen the tax rate increase from the low 40s to the high 50s, marking a big increase in the costs for those firms using real estate.
“Today’s announcement of a permanently lower sector multiplier for retail, hospitality and leisure will be recognising the fact that such businesses pay a far higher proportion of the business rates bill than their share of the economy. The fact that this will be paid for by those with larger properties is likely to be less welcome, building even greater bias into the tax system. The future consultation will provide the opportunity for this and other distortions of the business rates system to be debated and hopefully addressed.”
Commenting on business rates, Mark Outtrim, real estate assistant director at Deloitte, said: “Having been on a cliff edge, the extension of Retail, Hospitality and Leisure rates relief is a lifeline to pubs, hotels, cafes and shops across the country.
“This targeted relief will save a medium sized retail property with a rateable value of £45k, around £9k from their business rates bill. The announcement that the extension aims to support the transition to permanently lower tax rates for these businesses from 2026-27 also provides them with much needed long-term certainty. Meanwhile, larger businesses in these sectors that occupy multiple properties may be disappointed that the cap on relief was not increased.”
