Chancellor George Osborne used his Budget speech today to promise permanent changes to the way business rates are levied.
The British Independent Retailers Association (bira), which has been campaigning on the rates issue since 2011, welcomed key announcements in the chancellor’s statement.
Bira said it had called for:
-a review of a thicket of temporary reliefs – shops with a rateable value (RV) up to £12,000 will benefit from a permanent exemption, tapering away for RVs up to £15,000.
– a permanently graduated rate to make the tax more progressive – the lower multiplier will apply for properties with a RV up to £51,000, raised from £18,000.
– a change from rises based on Retail Price Index (RPI), which is no longer a national statistic, to Consumer Price Index (CPI) – this will happen from 2020.
– the frequency of revaluations to be increased to keep valuations in closer touch with the real economy – the government has announced the aim of reducing this to a widely-supported gap of just three years.
Bira said the announcement will take 600,000 premises out of paying rates and benefit a further 250,000 above the threshold. This will help both the 64% of shops in England and Wales that have RVs up to £12,000 and those around the average RV of a shop, which is just over £27,000.
While welcoming the changes and the recognition that the Treasury has shown of the seriousness of the issue, bira also noted that:
– ‘The new thresholds apply from April 2017 and in the meantime all shops with RVs below £50,000 will be worse off than last year, as the chancellor did not reverse his removal of the discount of £1,500’.
– ‘CPI will apply to uplifts from 2020 – this could and should have been applied now’.
– ‘The fundamentals of the tax remain in place’ – bira has called for a ‘truly fundamental review of the rating system to make the tax fit for the business world of 2020’ and believes that this work should start today.
Bira ceo Alan Hawkins commented: “The government has listened to businesses and in particular to the High Street shops, whose business rates pain first alerted everyone to the damaging effects of this outdated tax. These changes go a long way to alleviating that pain in the longer term and bira welcomes that.”
He added: “The world of retail is still changing at a breakneck pace, so we believe that we must look beyond 2020 and create a tax system fit for the next decade – and further.
“That task of achieving truly fundamental reform remains – and bira is keen to engage in the process of achieving real change for the future.”
The bira reform proposals can be downloaded at www.bira.co.uk/assets/download/2981