There will be a full review of the structure of business rates by the 2016 Budget, Chancellor George Osborne confirmed in his Autumn Statement today.
Osborne has also capped the inflation-linked increase in business rates at 2% for 2014/15 instead of the maximum 3.2%, which was the level of the Retail Price Index in September 2013.
It has also extended the doubling of small business rate relief; around 385,000 of the smallest businesses will continue to receive 100% relief from business rates until April 2016. Discounts for high-street retailers, pubs and cafes with a rateable value of £50,000 or less will be increased by 50% to £1,500.
Osborne said: “Last year, to help our high-street shops, pubs and cafes, I introduced a new £1,000 discount on their rates. With the brilliant Small Business Saturday this weekend I’m increasing that help by 50% to £1,500 next year.”
In his final Autumn Statement ahead of next May’s general election, the chancellor unveiled increasing lending support for small and medium-sized businesses.
He said: “To make sure our growing smaller businesses have access to credit, we will expand the British Business Bank and act to encourage peer-to-peer lending. And, with the Governor of the Bank of England, I am extending the Funding for Lending Scheme for a further year and focusing it exclusively on smaller firms.”
Liz Peace, chief executive of the British Property Federation, said: “For the sake of business competitiveness and government efficiency, the business rates system needs to change. We need a system that is more responsive, both to changes in the economy and to the relative position different businesses find themselves in.
“Basing a property tax on nine-year-old valuations is simply unfair and inefficient, and other countries have shown that with the use of technology you can design a far more responsive system. The compounding effect of annual RPI increases is also meaning that a higher proportion of taxation each year is coming from business rates, sucking the blood from our high streets and eroding many other businesses’ competitive edge.
“Undertaking a root and branch review of the system is a big decision many politicians have shied away from, making today’s announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”