A £300m fund will be made available to local authorities to allow them to provide discretional relief for those hardest hit by the business rates revaluations, chancellor Philip Hammond announced in the Spring Budget today.
The new fund will be allocated using a formula, and councils will decide which businesses should be given the relief.
Hammond also revealed that any firms coming out of small business rate relief would benefit from an extra cap, meaning their rates will not increase by more than £50/month.
These measures, together with a £1,000 discount on business rate bills for all pubs with rateable value of less than £100,000, amount to a further £435m cut in business rates, Hammond said.
He pointed out that business rates raise £25bn a year, so they cannot be abolished as some people have suggested. But he recognised the need to make the business rates system fairer.
In particular, he admitted that the “digital part of the economy” needs to be better taxed. It comes after some critics pointed out that online retailers such as Amazon would enjoy a cut in rates for its warehouses as part of the upcoming revaluation, while independent bricks-and-mortar retailers in some areas face a rise.
The government will set out its preferred approach for reforming the system before the next revaluation, which is due in five years.
Hammond also reiterated that the national living wage will rise to £7.50 in April, as previously announced, and the government will increase the income tax free personal allowance to £11,500 and the higher rate to £45,000.
This will rise to £12,500 and £50,000 respectively by the end of this parliament.