Oxford Street businesses to only save a fraction on rates bill after changes to indexation

 
Helen Cahill
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Oxford Street shops have face dramatic tax rises this year (Source: Getty)

Oxford Street stores will only save a fraction on their business rates bills next year when the government changes its indexation of rate rises.

In the Autumn Budget, Philip Hammond said that next year the indexation of business rates will switch from RPI to CPI.

Read more: Toys R Us burdened with £17m rates bill due to rates revaluation delay

The British Retail Consortium campaigned for the change, saying it will save retailers £210m over the next two years.

However, property experts have warned that for some businesses, the saving dwarfs the overall rise in business rates faced by firms in the centre of London.

Property consultancy Daniel Watney has found the measures will save Oxford Street firms an average of 1.6 per cent on their business rates bill for the period until the next revaluation.

For example, next year Zara is saving just £10,000 on a rates bill of £1.3m for its flagship on Oxford Street.

Read more: London firms lifted as Hammond lets the capital keep its business rates

Selfridges, which has the largest amount of floorspace on Oxford Street, will save £100,000 on a total bill of £17.1m.

Alex Izett, associate partner in the ratings team at Daniel Watney LLP, said the switch to CPI would provide some relief but "does not go far enough for many small to medium sized businesses".

“Ratepayers have been calling for three yearly valuations for some time now so the chancellor’s announcement is welcome, however this will not be deliverable unless the government provides the Valuation Office Agency with the funding necessary to carry out regular and accurate valuations," Izett said.

"This is an organisation that has witnessed year on year budget cuts, over 20 per cent in this year alone.”

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