20 Mar 2015
Retailers and business groups have welcomed Government plans to carry out a ‘radical review’ of the business rates system in England.
Chancellor George Osborne confirmed the review in his 2015 pre-election Budget, stating that the current business rates system ‘has not kept pace with the needs of a modern economy and changes to our town centres’.
Business rates, which date back to the Poor Law established in 1601, are currently calculated according to the rental value of the property a company uses.
However, businesses have long campaigned for an overhaul of the system, with the Confederation of British Industry arguing that its ‘outmoded, clunky and regressive’ nature is contributing to the demise of the UK High Street.
The review will examine how businesses use property, what the UK can learn from other countries about local business taxes, and how the system can be modernised so it better reflects changes in the value of property.
John Longworth, from the British Chambers of Commerce, applauded the move: ‘It is good to see that the Government is looking at a wide-ranging review of business rates, as this iniquitous tax hammers businesses across the country, before they’ve even made single pound in profit.’
Helen Dickinson, Director General of the British Retail Consortium, said: ‘To guarantee that this review is a success it’s absolutely crucial that the Government seeks authoritative and independent analysis as it progresses, with solutions based on the objective consideration of supporting evidence.’
However, some experts have warned that the scope of the review may be limited if the outcome is ‘fiscally neutral’, as many reports have suggested.
The review is set to report back by the 2016 Budget.