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Government commits to CPI business rates reform

The government has reaffirmed its commitment to base business rates on the Consumer Price Index (CPI) inflation rate from 2020.

The business rates system is linked to the faster-rising Retail Prices Index (RPI) inflation rate. Campaigners argue that traditional retailers lose out as etailers tend to operate with smaller properties.

The Treasury confirmed that proposals to base future rates on CPI will still go ahead as planned.

A spokesperson for the Treasury said: ”We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course.”

The switch will save businesses £1bn in taxes during its first three years, according to the government.

This equates to a £250m saving for the retail sector.

Mark Rigby, chief executive at business rates adviser CVS, said: “The chancellor has moved quickly and decisively to quell speculation. Reneging upon the switch would have been a double whammy for business with higher-than-forecast inflation this year and its compound effect.”

The proposed move to reduce business rates by switching to CPI was initially signalled in last year’s Budget. 

 

Readers' comments (1)

  • It's difference will be negligible because of the lack of discipline of many business owners.

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