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Hospitality: Rates surcharge threatens high street closures

The surcharge would see 5,000 high street properties over £500,000 rateable value impacted by a higher tax rate. These properties at present employ 120,000 people across the UK. While many business fall beneath this threshold, these larger premises attract footfall to our country's high streets, benefiting sites of all size.

The Government set out in its manifesto to reform business rates with the goal of levelling the playing field for high street retailers. Labour has legislated to reduce the business rates multiplier for retail, hospitality and leisure (RHL). Business rates are calculated as follows: multiplier (tax rate) x rateable value of a property. 

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Despite this progress a proposed surtax for properties with a rateable value over £500,000 has no sector-specific exemptions, with RHL properties eligible for the surcharge alongside other large businesses.

Chair of UKH, Kate Nicholls, believes changes are very much needed to support high street hospitality.

“Reform of the system is long overdue and we now need to see the Government deliver in full its pledge to level the playing field for the high street”, she commented. “That means implementing the maximum possible rates discount for properties below £500,000 rateable value and exempting larger hospitality properties from the surcharge.”

She continued: “Delivering both those measures is the only way to fulfil that commitment and prevent hospitality businesses from being taxed out. The sector was hit by £3.4bn annual cost increases in April, and the threat of this surcharge will only increase this already extortionate figure.

“Hospitality has the ability to create jobs, support local communities to help them thrive and regenerate our high streets – we need the Government to back us in order to do develop locations where people want to live, work and invest.”

Additionally, according to the trade bodies, it has been calculated that shops and hospitality could be removed from the higher multiplier (rateable value >£500k), with only a slight increase in the multiplier for all other large properties in this bracket, for example, office blocks.

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