The Chancellor’s Budget tax raid on the self-storage industry resulted in Big Yellow Group posting nursed annual losses today of £35.6 million.
George Osborne’s move to make self-storage VAT-able affects the firm as around two-thirds of its customers are individual consumers who can’t claim the additional cost back, according to chief executive James Gibson. They face an average increase of around 10% or £2.50 a week from October, Gibson says.
The slide into the red for the year to March 31 compares with a £6.9 million profit previously, after a £51.4 million write-down on its property portfolio as a result of the looming change. Big Yellow — with rival Safestore and the British Property Federation — is still in talks with the Treasury over the raid. “Obviously we would prefer that the measure didn’t come in,” Gibson added.
But the firm also stands to benefit from VAT changes with an estimated £18 million in previously irrecoverable VAT on capital expenditure potentially due. The changes would also lower the cost of new sites at Enfield, Guildford Central and Gypsy Corner by about £3 million. Big Yellow is also buoyed high exposure to the healthier London economy, with nearly three-quarters of business coming from within the M25. The full-year dividend was up 1p to 10p.
