26 February 2019

The government’s Communities and Local Government Select Committee has just published its High Street report after consultation with retailers and trade bodies, including the NHF/NBF.  The MPs on the Committee expressed grave concern about the decline of the high street due to the growth of online shopping which has led to store closures, declining footfall and persistently empty shops. 

They support the NHF/NBF’s calls for changing the outdated system of business rates which leads to online businesses paying far less in rates than ‘bricks and mortar’ businesses on high streets and town centres.  For example, they reported that business rates for Amazon account for only 0.7% of their turnover, whereas retailers on the high street pay anything between 2% and 7% of their turnover in business rates. 

The government has already announced that a Digital Services Tax will be introduced in April 2020, but this is not expected to be a tax on online sales.  It is more likely to be a 2% tax on digital businesses who get substantial income from online marketplaces such as Amazon or eBay, social media platforms and search engines.  As such, it won’t make any difference to non-digital businesses like salons or barbershops, but it could help to offset reductions in business rates for high street retailers that the Committee has called for.

Hair salons, beauty salons and barbershops already benefit from small business rate reliefs and many pay no business rates at all.  In the Autumn budget, the government announced a further discount of one third on business rates for businesses with a rateable value of £51,000 or less for 2019/2020 and 2020/2021.  But the system has got complicated with lots of short-term reliefs which are inconsistently applied by different local authorities. 

We’re delighted that the NHF/NBF’s calls for change on business rates is gathering momentum

Hilary Hall, NHF/NBF chief executive said: “We’re delighted that the NHF/NBF’s calls for change on business rates is gathering momentum.  The Treasury Committee has also announced an enquiry into business rates so we’re consulting with our Members to get their views on the current system of business rates, how they could be improved or replaced with something else.”