The retail impact assessment threshold of 2,500 m2
The default national threshold for a retail impact assessment is 2,500 m2 of floorspace where a local plan sets no figure. The sequential test has no threshold at all and applies at any scale.
Where a local plan sets no figure of its own, the retail impact assessment threshold is 2,500 m² of floorspace. Above that, a retail or leisure proposal outside a town centre and not in accordance with an up-to-date plan needs an impact assessment. Below it, the sequential test can still apply, because the sequential test has no floorspace threshold at all. Those two tests are frequently treated as one exercise, and they are not. One asks where the development should go. The other asks what it would do to the centre.
The default national threshold and its purpose
National policy requires an impact assessment for retail and leisure development outside town centres that is not in accordance with an up-to-date development plan, where the proposed floorspace exceeds a locally set threshold or, in the absence of one, 2,500 m².
The figure is a default rather than a standard. It exists so that a plan without a bespoke threshold still has one, and it was set at a level intended to catch development capable of affecting a centre's trade. In a city with several district centres it is generous. In a market town with a single high street, a 1,500 m² foodstore outside the centre can do real damage and still fall below the national figure, which is exactly why most plans set something lower.
The assessment itself looks at two things: the impact on existing, committed and planned public and private investment in a centre or centres in the catchment area, and the impact on town centre vitality and viability, including local consumer choice and trade in the centre and the wider retail catchment. If the proposal is likely to have an adverse impact on either that policy regards as significant, it should be refused.
Finding the locally set threshold
Start with the adopted plan's retail or town centre chapter, then the policies map, then any town centre or retail supplementary planning document. Thresholds in adopted plans commonly sit well below the national default, and some plans set different figures for convenience and comparison goods, or for edge of centre and out of centre locations.
Two details to settle at the same time. Whether the threshold is expressed as gross or net floorspace, because the difference on a foodstore is substantial and plans are not always explicit. And whether it applies to the proposal as a whole or to the net additional floorspace, which matters on an extension or a reconfiguration.
| Element | Position where the plan is silent |
|---|---|
| Impact assessment threshold | 2,500 m² of floorspace |
| Sequential test threshold | None, it applies at any scale |
| Edge of centre, retail | Well connected to and within easy walking distance of the primary shopping area, generally taken as 300 m |
| Edge of centre, office | Within 500 m of a public transport interchange |
| Out of centre | Not in or on the edge of a centre, though not necessarily outside the urban area |
The sequential test and the order it follows
The sequential test applies to main town centre uses proposed in a location that is neither in an existing centre nor in accordance with an up-to-date plan. It has no size threshold, so a 300 m² unit can be caught where a 3,000 m² unit on an allocated site is not.
The order is town centre sites first, then edge of centre sites, then out of centre sites, with a preference among out of centre options for those that are accessible and well connected to a centre. Applicants are expected to demonstrate flexibility on format and scale, which is the part that decides most sequential cases.
Flexibility is where applicants lose. An operator who says the scheme requires 2,800 m² on a single level with 120 surface car parking spaces has defined the requirement so tightly that no town centre site can ever meet it. The honest approach is to test the realistic range: a smaller format, a split over two floors, a reduced car park with a service arrangement, and to explain with evidence why each town centre option was discounted. A Sequential Test (Retail) that documents each site considered, its availability, suitability and viability, and the date of the search, is far harder to dismiss than a paragraph of assertion.
What an impact assessment contains at and above the threshold
The structure of a Retail Impact Assessment follows the policy tests rather than a standard template.
- Definition of the catchment area, with the methodology stated.
- Identification of the centres within it, and their role in the plan's hierarchy.
- A baseline of each centre's health, drawn from the authority's own town centre health checks where they exist.
- Turnover of the proposal, derived from floorspace and a stated sales density.
- Trade diversion from each centre, expressed as a proportion of that centre's turnover.
- Assessment of effect on committed and planned investment, naming the schemes.
- Cumulative assessment with other commitments.
Sales densities and expenditure figures should come from a published source and be stated with their date. Where a figure is an assumption, label it as one and test the sensitivity. An assessment that produces a single trade diversion percentage with no sensitivity range invites the authority's consultant to produce a different one.
Illustrative example: a 3,100 m² gross discount foodstore proposed on a vacant out of centre site, 900 metres from a market town's primary shopping area. The plan sets no local threshold, so 2,500 m² applies and an impact assessment is needed. Three town centre and edge of centre sites are tested. One is available but 1,900 m², and the operator's flexibility case has to explain whether a 1,900 m² format is workable. Trade diversion from the town centre is modelled at a level the applicant argues falls short of the policy threshold for refusal. The figures are illustrative rather than drawn from a real case.
Where a change of use triggers the tests
This is the point that changes most often in practice. Because Class E now covers retail, food and drink, offices, indoor fitness, health services and nurseries in one class, many changes that would once have triggered the retail tests now need no permission at all. An office in a retail park becoming a shop, within an existing Class E unit, is not development.
The tests still bite in three situations. Where a change of use needs permission because the existing lawful use is outside Class E or a condition restricts it. Where new floorspace is created, including by mezzanine insertion or extension. And where a permitted change under Part 3 of Schedule 2 to the General Permitted Development Order 2015 is subject to prior approval and the relevant class imposes its own considerations.
A related point about thresholds and who decides is covered in our note on Greater London Authority referable thresholds, where scale changes the decision maker rather than the test.
Evidence to submit, and what gets challenged
Submit the sequential test and the impact assessment as separate documents even when one consultant writes both. Officers read them separately, consultees comment on them separately, and a combined document tends to leave the sequential site search thin.
Expect challenge on four points. The catchment definition, because a generous catchment dilutes the diversion percentage. The sales density, because a low figure reduces turnover. The site search date, because a site available six months ago may not be now. And the flexibility position, because that is where the authority's consultant will say the test was not properly applied.
Where the economic case for the scheme is part of the argument, an Economic Impact Assessment dealing with employment and expenditure sits alongside rather than inside the impact assessment. Keep the two apart, because mixing benefits into the impact analysis muddies the policy test.
Enter your postcode on PlanScope to see which reports a retail or leisure proposal is likely to need before you commission the evidence base.
This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. For specialist technical reports, including retail impact modelling, qualified professional input may be required.
Frequently asked questions
Does the 2,500 m2 threshold always apply?
Only where the local plan sets no threshold of its own. National policy makes 2,500 m2 the default for retail and leisure development outside a town centre that is not in accordance with an up-to-date plan. Many adopted plans set lower figures, sometimes different ones for convenience and comparison goods, so check the plan first.
Is there a floorspace threshold for the sequential test?
No. The sequential test applies to main town centre uses proposed outside an existing centre and not in accordance with an up-to-date plan, at any scale. A 300 m2 unit can be caught where a 3,000 m2 unit on an allocated site is not, because the trigger is location and plan conformity rather than size.
What counts as edge of centre?
For retail purposes, a location well connected to and within easy walking distance of the primary shopping area, generally taken as 300 metres. For offices, a location within 500 metres of a public transport interchange. Out of centre means a location that is neither in nor on the edge of a centre, though not necessarily outside the urban area.
Why do sequential tests fail?
Almost always on flexibility. An applicant who defines the requirement as a specific floor area on a single level with a fixed car park has ruled out every town centre site by definition. Policy expects flexibility on format and scale, so test a realistic range of formats and explain with evidence why each town centre option was discounted.
Do the retail tests apply to a change of use within Class E?
Usually not, because a change between limbs of Class E is not development and needs no permission. The tests bite where permission is needed because the existing lawful use is outside Class E or a condition restricts it, where new floorspace is created by extension or mezzanine, or where a prior approval class imposes its own considerations.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.