The Confederation of British Industry and more than 40 other trade groups Employers’ groups have urged Rishi Sunak to cut business rates in the autumn Budget. In a joint statement they have called for fundamental changes to be made to the system, which taxes companies based on the premises they occupy. The groups, which represent more than 260,000 businesses and 9m employees, say failing to deliver reform is contrary to the Government’s stated ambition of creating a high-wage, high-productivity and high-investment economy. Supporting this view shadow Chancellor Rachel Reeves has warned that the business rates system is no longer fit for purpose “It penalises high-street shops in favour of online giants and deters businesses from investing in new green technologies”.
Sunak announces that the government will not be abolishing business rates, but instead making the existing system fairer. He says that, from 2023, the business rates system feature revaluations every three years (more frequent than the current system). As expected, he adds that a green investment relief will be introduced to encourage businesses to adopt green technologies like solar panels. In addition, a new business rates improvement relief that will allow businesses to make property improvements and, for 12 months, pay no extra business rates. Both of these measures will take effect from 2023. Also, next year’s planned increase in the business rates multiplier (the calculation used to work out business rates) will be cancelled.
Source: Financial Times, Daily Express,The Guardian, The Independent, Startups.
The Startup Pack Comment: The opposition are warning that the current system served as a tax on investment. Scrapping the present business rates system is all very well but what we need to see is the detail of what it would be replaced by. Undoubtedly in the retail market the current business rates system does give on-line retailers a significant advantage over the traditional store-based businesses, but they represent only a relatively small part of the economy. If a system is to replace the business rates then it has to be one that is not only fairer to all, but one which does not discourage investment by existing businesses or the setting up of new start-up businesses.