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UK business rates: An unfair tax on ATMs and cash

ATMs are the latest victim in the rush to levy more taxes in the UK; the result could be machines removed and communities deprived of convenient access to cash.

August 25, 2015 by Ron Delnevo — Chairman, Cash and Card World

"Business rates" are property taxes that are applied to all commercial properties in the U.K. When the business rate scheme was introduced in 1990, many assumed that only the business premises themselves would be subject to this tax on "non-domestic" property. However, as ever with taxes, original intentions are soon forgotten in the desperate rush to rake in more revenue for the government.

ATMs are the latest victim of the recent charge to levy more taxes in the U.K.

In particular, convenience stores around the country face shocking tax bills after excessive action by the Valuation Office Agency. In 2013, the VAO fully mobilized its resources to apply business rate valuations to "hole-in-the-wall" ATMs built into the fronts of shops.

This was totally contrary to expectations that such ATMs should be regarded as a normal part of a retailer's business, whilst at the same time providing an invaluable service to local communities.

But now these highly inappropriate charges are now being imposed on unfortunate retailers — and sometimes backdated several years.

It is believed that more than 10,000 ATMs will be hit by these onerous new charges, which can be assessed retrospectively to 2010. Each ATM could be liable for an average annual bill of up to 6,000 pounds ($9,416), with some of the more popular locations being hit with business rate levies far in excess of this figure.

These charges are effectively a tax on cash, which, of course, millions of U.K. citizens depend upon to live their daily lives.

Worse still, now that so many businesses are subject to these unfair charges, it is feared that free-to-use ATMs will disappear altogether, as already hard-pressed community stores will not be able to subsidize the machines from their dwindling profits.

National and local government in the U.K. collect around 26 billion pounds ($40.8 billion) a year through business rates, making them a rich source of taxation revenue. It has been suggested that measures introduced by the previous National U.K. Administration, allowing local government to keep 50 percent of any net increase in business rates, have made local officials more eager to raise such taxes from anything on which they can slap a new punitive bill.

The current national government has ignored such issues, instead going even further and announcing that some local governments will be allowed to keep 100 percent of business rate growth in their geographic domains. If these changes are judged to be successful — i.e., if business rate revenues increase — it is expected that the changes will be rolled out by local governments across the U.K.

ATM services may well be one of the main sufferers as a result of these changes, with machines removed and villages and urban communities around the U.K. deprived of the convenient access to cash local people need and deserve.

The government should reverse course on this policy as soon as possible. Local authorities risk putting many convenience stores out of business, and seeing free-to-use ATMs disappear from high streets and local communities throughout the United Kingdom. The ATMIA and its many supporters are calling for the government to do the right and sensible thing, and take ATMs out of the tax system altogether.

Short-sighted thinking like this won’t make councils richer but rather, will do the opposite. ATMs will be withdrawn and people will have less cash to spend in neighborhood retailer shops and other businesses, thus threatening to destroy already fragile local economies.

About Ron Delnevo

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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