Business rates relief and reform may well be on the cards. In a clear indication that the Chancellor will include business rates measures in his Budget on 3 March, local authorities received letters that urged them to wait until after the Budget to issue business rates bills. They were told the delay would avoid confusion for businesses and the cost of having to re-bill them in the light of any measures that may be introduced in the Budget.
Certainly, many commentators including the CBI, are calling for at least a three-month extension of the business rates relief currently in place for closed businesses. Although much has been made of the support packages available for Retail, Hospitality and Leisure sectors, many of the business in the sector’s supply chains have had to rely on discretionary grants, which by their nature offer an uncertain and often delayed outcome. They have not had the benefit of business rates reliefs and are in much need of support.
Many support a more targeted approach, possibly based on the rating list categories and subcategories. It seems realistic to expect an announcement on business rates relief in the Budget.
On the topic of reform, Business Rates Reform is long awaited, with the next revaluation due in 2023. Essentially a property tax, business rates are one of the most easily collected taxes leaving many asking how the government would replace the £30 billion revenue it could lose from any Business Rate Reforms.
It may consider that it can bare the short-term pain, for the longer-term gains resulting from improved business investment. In addition, robbing Peter to pay Paul by introducing new taxes would not help UK businesses or promote the UK as a great place to do business.
The pressure for reform may also come from apparently conflicting government objectives. The Net Zero agenda requires the UK to invest £10 billion between now and 2050 in public and commercial buildings. This investment in energy efficiency is dis-incentivised by the current business rates regime. If businesses upgrade their premises, the value of their property rises as does their business rates liability.
More radical suggestions for reform include the abolition of business rates altogether with an increase in the VAT rate raising the missing government revenues, or the introduction of an online sales tax.
Wayne Thomas, partner at Bates Weston adds:
“Business rates are a significant burden for most businesses and without reform, risks an uneven playing field, particularly for retailers between the “bricks and mortar” and online sectors. The step changes in the rates bill caused by revaluations make planning difficult for businesses and the current system does not encourage business investment. We hope that business rates reform will be forthcoming and that it will produce a simpler, fairer system not a further tweaking of an already complicated tax.”
