Car showrooms face £169M tax hike AND assault on UK car retail market by online giant Amazon

Tuesday, September 12, 2017

Our data reveals that the 5,815 Car Showrooms across England and Wales are facing a staggering £169million business rates tax hike over the next 5 years as Internet giant, Amazon, prepares to enter the UK car sales market from Luxembourg.

The news comes as car registrations declined by 9.3% in July compared to the same time last year.

Amazon prompted anger when it emerged in 2015 that it had paid just £11.9 million in tax while its Luxembourg unit took £5.3 billion of sales from British internet shoppers without being subject to UK levies.

Whilst car showrooms continue to open, most recently the JCT600-invested Porsche Centre in Teeside and The Car People’s £6million dealership in Warrington, they now face the threat from the Internet giant amidst declining registrations.

Amazon is currently weighing up plans to begin selling cars to UK consumers on its website after rolling out a similar programme in France and Italy, where online customers can access promotions or reach a price arrangement with the car manufacturer directly through the Amazon platform.

The online retail giant is expected to team up with a vehicle manufacturer to offer promotions and receive orders for new cars from UK customers, fuelling concern for the future of the physical car showroom.

Rateable Values of every commercial property in England and Wales have now been adjusted to reflect changes in the property market. The new Rateable Values have already been used to determine the basis of the tax calculations for business rates which came into effect in April.

However, according to our data, new Rateable Values published show Car Showrooms across England and Wales will see their property assessments increase by almost £61.95million; a 12.4% rise.

Our analysis shows that the 5,815 Car Showrooms across England and Wales liable for rates had a combined Rateable Value of £498.24million based on the last property assessment in 2010, which formed the basis of tax bills for the last 7 years, but this increased to £560.19million from 1st April 2017.

As a result, we project that the amount payable under the new Rateable Values averaged out over the next 5 years across all Car Showrooms in England and Wales represents a £33.73million per year increase in tax allowing for transitional relief and forecasted inflation.

We know that Car Showrooms paid between them £245.48million in business rates for 2016/17 which will increase over the next 5 years to £279.21million per year on average taking the total 5 year property tax bill to £1.4billion.

The top 3 car showrooms set to face the highest increase in rates tax over the next 5 years include Toomey (Southend) Ltd, Chandlers Worthing BMW and Tunbridge Wells Audi, who will collectively face a £1.6million tax hike.

Amazon, which has faced allegations of tax avoidance in its eighth profitable quarter, with profit up 40%, to $724m (£560.8m) in the first three months of the year have already felt the wrath of UK shopkeepers as the Rateable Value of some of its vast distribution centres reduced from April whilst small shops saw overall increases.

Sajid Javid the Secretary of State for DCLG has already vowed to "level the playing field" between online retailers and high street shops with the Chancellor saying at the Budget that the digital part of the economy needed to be better taxed in the medium term - although no specific measures have so far been announced.