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Blueprint for business rates reform unveiled

The British Property Federation has set out six proposals for reforming the business rates system, as the chancellor’s Autumn Statement draws closer.

Its new research paper, Better Rates for Better Business, urges politicians to commit to a package of fundamental reforms in the next parliament, including a move towards the annual revaluation of properties for business rates - rather than every five years as is it now - and an end to the system whereby rates increase each year in line with inflation, regardless of conditions in the wider economy.

This would create a fairer and more responsive tax, the BPF said, as well as generate significant administrative savings, reduce appeals, and allow the government to take the smallest properties out of business rates altogether.

The research recommends the following commitments be made in the Autumn Statement on December 3:

  • Tie business rates more closely to changes in actual rental levels
  • Create greater fairness for ratepayers in the short term by, for example, freezing business rates in 2015

And during the next parliament:

  • Move to a system of annual revaluations
  • Learn lessons from other countries with more responsive systems
  • Ensure that business rates respond to economic performance
  • Take smaller businesses out of the system

BPF chief executive Liz Peace said: “There is now widespread agreement that the [business rates] tax, designed to help businesses thrive by funding the essential local services upon which they depend, is now constraining business growth and discouraging investment.

“Unlike every other tax in the UK, the business rates burden does not fluctuate with the economic cycle, meaning businesses have to pay the same regardless of economic conditions, and this, we argue, must change.

“Unless government acts, there may come a time when rates become so high that they squeeze investment out of all but our most prosperous towns and cities. This would be a disaster for the government’s welcome aspiration to rebalance our economy and to bolster the role of regional cities as engines of local growth.”

The government announced in last year’s Autumn Statement that it would discuss the options for a longer-term administrative reform of business rates post-2017.

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