Businesses are set to save £2.3bn through changes to the rules for business rates, chancellor Philip Hammond announced in today’s autumn Budget.
The government will bring forward the planned switch from the Retail Price Index (RPI) to Consumer Price Index (CPI) by two years, to April 2018. This is forecasted to save businesses £2.3bn.
Hammond said the decision was made after listening to concerns regarding the costs of uprating business rates.
Future revaluations will now take place every three years, instead of every five years. Hammond reasoned that “shorter revaluation periods will reduce the size of changes in valuations”.
He also announced that the VAT threshold for small businesses will be frozen at £85,000 for the next two years.
Hammond said that while he was “not minded to reduce the threshold”, he will “consult on whether its design could better incentivise growth”.
He added that to address the tax challenge posed by the digital economy, income tax will be applied to royalties on UK sales paid to low-tax jurisdictions at multinational digital companies from April 2019.
“This does not solve the problem, but it does send a signal of our determination,” said Hammond.
Online marketplaces will be made jointly liable for VAT along with their sellers, in a crackdown on online VAT fraud.
Meanwhile London’s local authorities will be able to retain 100% of the capital’s business rates, in a pilot programme taking place next year.
In other new measures, the National Living Wage will grow by 4.4% in April, from £7.50 an hour to £7.83 - handing full-time workers over the age of 25 a further £600 pay rise.