Chancellor Philip Hammond has brought the next business rates revaluation forward by a year to 2021, in a move that has sparked mixed responses from the industry.
Earlier today, the chancellor told the House of Commons the government would “go on supporting British businesses” by bringing forward the move to three-year rates revaluations.
The change forms part of plans to revalue rates every three years rather than every five, to lessen the impact of rates at each revaluation.
The British Retail Consortium has welcomed the move, with chief executive Helen Dickinson observing it is a “step in the right direction”.
“More frequent revaluations are no easy task and require strong collaboration and exchange of information jointly between the Valuation Office and ratepayers.”
While others agreed it marked a positive move, they argued the government has failed to address the immediacy of the problem.
John Webber, head of business rates at Colliers International, said: “It does nothing to help those businesses, particularly the retailers who are struggling, with the system today.
“Some businesses, particularly those in London, saw massive rises in their rates liabilities, some of which they needed to pay last year, but with the second big uplift coming this year, in addition to a 3% inflation rise, they will be knocked for six. It’s like putting a plaster on a gunshot wound and certainly won’t stop the pain being felt today.”
Webber has called for a “proper business rate review” similar to that undertaken by Ken Barclay in Scotland last year.
Ed Cooke, chief executive at retail property organisation Revo, said: “The Chancellor’s unexpected concession on business rates is welcome, but does not alleviate the pressure on the retail sector in what the government acknowledges is a fragile economy.
“Three-year revaluations mean we have a tax more closely aligned with market conditions, but nonetheless still totally out of step with the structural changes within the retail sector.
“We urge the government to hold to its commitment to review business rates as well as exploring how the digital economy is taxed, because our high streets need meaningful action now. Such is the pace of change in retail, the government risks failing to protect the vibrancy and vitality of our industry, which employs over three million people across the UK.”
Hammond said a call for evidence would be made on exploring digital tax. He will consult on a new VAT collection mechanism for online payments as well as encouraging digital payments.
In response to this, Dickinson said: “The government needs to look more widely than simply focussing on digital tax, instead looking across all elements of business taxation.
“Given the fundamental questions we now face in a digitally connected and globalised world where tax systems have evolved on a national basis, the government needs to go further than the current business tax road map, published in March 2016.
“Specifically, there is a need to rebalance away from input taxes (on things like people and property) and towards output taxes (on profits) as well address other underlying problems with the way that different taxes work. This would attract investment which would lead to greater productivity and improved living standards.”