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Government launches 'wide-ranging' business rates review

The Government has launched “the most wide-ranging review of business rates in a generation”.

The review will look at how businesses in England use property, what the UK can learn from other countries about local business taxes and how to modernise the system. It is due to report by the 2016 Budget.

Among other questions, it asks: “What evidence is there in favour of the Government considering a move away from property-based business tax towards alternative tax bases?”

The review has been launched ahead of Wednesday’s Budget as part of an attempt to woo businesses before the election.

In a speech to local businesses in Cambridge later today, chief secretary to the Treasury Danny Alexander will say: “Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

“The Government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.”

The Government committed to reviewing business rates in December. It also announced a £1bn package aimed at reducing the burden on small businesses, including increasing the discount for retail premises with a rateable value of £50,000 or less to £1,500 from April 1 for a year.

Businesses in England paid £20.5bn in rates in 2013-14.

John Cridland, director-general of the Confederation of British Industry, said: “The current system of business rates is outmoded, clunky and regressive, and it’s holding back the high street. That’s why we’ve been calling for a wholesale review of the system.

“The package of measures already announced in the Autumn Statement that will come into force from April will help ease the pressure on hard-pressed retailers. But this review provides an opportunity to go much further and we’ll be making the case for removing the smallest firms from paying business rates completely, linking rates to CPI rather than RPI and introducing more frequent valuations.

“This would go a long way to achieving a more competitive business rates regime that incentivises business investment and supports the high street.”

@KirstyMcGregor

Readers' comments (2)

  • The point is however much the government reduces business rates, it can't do anything about the incompetence of how some retailers are run who always use rates as an excuse for their failings.

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  • Ultimately, the retailer will look at the total cost so rates + rent. If the biz rates reduce, the corp landlords will just increase the rent to absorb the saving.

    At least it is a way of getting a few extra scraps of tax from the off shorers (P Green etc).

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