Retailers located in London’s West End are set to face a £45m rates tax increase in April, according to a report by real estate advisor Altus Group.
Business rates help announced at the Autumn Budget last year, which promised to slash bills by a third for high street business in April, was restricted to just small value premises selling goods, food and drink with a rateable value of less than £51,000.
The group said some 7,995 premises across London’s West End covering all sectors will not be eligible for any help, and will all see rises in tax demands as new bills are to “set to hit doormats in the coming weeks”.
According to Altus, the effects of September’s CPI rate of inflation of 2.4%, coupled with the third year of ‘caps’ of up to 49% for 2019/20 which continue to phase in big increases in business rates liabilities for large properties, creates a ‘double whammy’ of tax rises.
Selfridges will see its business rates bill increase to £17.4m in April, up £365,420 compared with last year, whilst luxury retailers like Louis Vuitton, Chanel, Burberry and Christian Dior will all seen their tax demands double since the 2017 revaluation came into force.
Altus Group said that these premises in the West End paid between them £1bn in business rates during 2016/17, the final year before the “controversial revaluation” came into effect.
Robert Hayton, head of UK business rates at Altus Group said: “Rents paid determine rates and, at the assessment date for the 2017 revaluation, demand for space was strong and record rents were being set resulting in very large increases in rates compared with the previous assessment date seven years earlier.
“A premium is often by a small number of luxury retailers in order to have a presence, even when loss making of itself, in the West End. There are independents forced to pay equally high rents to get into an effective retail clique- many of which find they cannot then support the burden of high rates those rents lead to.”