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Transitional relief could cost retailers over £1bn, BRC warns

The BRC said that the money lost to Transitional Relief in 2023-26 is another burden on the sector that must be accounted for, particularly for retailers outside of London who are worst affected by the scheme

Retailers have warned that the failure to fix the “flawed” Transitional Relief system could cost the industry over £1bn between 2023-2026, and it will reportedly force shops which are most impacted by artificially inflated rates bills to close, according to the British Retail Consortium (BRC).

The BRC is calling for an end to the “downwards phasing” part of Transitional Relief, as today marks the final day of the Government consultation on the design of the scheme for the 2023 Business Rates revaluation.

The Transitional Relief system sees retail subsidising other sectors, including over £550m between 2017-20 for government-owned infrastructure. It also forces businesses in poorer parts of England to subsidise those in richer areas, where rents are rising.

The BRC said that Transitional Relief is a scheme which limits how much a firm’s business rates can change in a year, and it forces those who are being overcharged on their business rates (as their rateable value falls) to subsidise those who are underpaying (as their rateable value rises).

It added that the money lost to Transitional Relief in 2023-26 is another burden on the sector that must be accounted for, particularly for retailers outside of London who are worst affected by the scheme.

Tom Ironside, director of Business and Regulation at the BRC, said: “The business rates system is damaging our high streets and town centres by directly undermining store viability. The retail industry accounts for 5% of the economy yet is saddled with 25% of the total business rates bill.

“Transitional Relief is a flawed system that could cost retailers over £1bn during the next three years, leaving them with no choice but to close those shops which are most impacted by artificially inflated rates bills. This is money which would be used to help address the cost of living, or support the vitality of towns and cities around the UK.”

Jerry Schurder, Business Rates Policy lead at Gerald Eve, who undertook the research for the BRC added: “This would have a devastating effect on the affordability of retail premises and damage hopes of a recovery in the high street. Critically it would also be diametrically opposed to the Government’s levelling-up agenda.”

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