The Government has launched what it calls “the most wide-ranging review of national business rates in a generation”.
The review was announced by Danny Alexander, chief secretary to the Treasury. It will examine the structure of the current system, which is paid annually on 1.8 million properties in England.
It will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how the system can be modernised. The review will be completed by Budget 2016.
Danny Alexander said: “Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.
“The Government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax.”
In the meantime, the Government has introduced measures to take the pressure off business owners. From 1 April 2015 the government is:
- increasing the business rates discount for smaller retail premises with a rateable value of £50,000 or below to £1,500 to 31 March 2016, benefiting 300,000 shops, pubs, cafes and restaurants;
- doubling small business rate relief for a further year to 31 March 2016 to provide support for 575,000 of the smallest businesses, and ensuring 385,000 pay no rates at all;
- capping the rise in the business rates multiplier at 2%;
- extending transitional rate relief to support 16,000 small businesses facing bill increases due to the ending of transitional rate relief.
Helen Dickinson, director general of the British Retail Consortium, said: “A ‘radical' review is great news for all of us who want a fairer, more efficient and sustainable system. With cross-party political support for a fundamental review of business rates I'm confident that we can bring about badly needed change, and in doing so secure the investment, jobs and growth that have been held back by the burden of this pernicious tax.”
John Longworth, director general of the British Chambers of Commerce (BCC) said: “Actions speak louder than words. Unless a root and branch reform of business rates is delivered at Budget 2016, businesses will regard this as a missed opportunity to tackle a huge brake on investment and growth.”