Chancellor suggests ‘staircase tax’ could be abolished

Chancellor suggests ‘staircase tax’ could be abolished

Chancellor Philip Hammond has suggested that the so-called ‘staircase tax’ could be abolished by the end of this year.

Image result for tax abolishmentDuring a Treasury Select Committee hearing, the Chancellor admitted that the tax has been putting additional stress on businesses. He told the Committee that he is ‘certainly looking at’ the legislative steps that can be taken to abolish the tax.

Termed the ‘staircase tax’, businesses with offices on multiple floors of a commercial property have been receiving separate business rates bills for each floor they occupy, provided the areas separating the offices are communal. Some firms in England and Wales have seen their business rates rise as a result.

Business rates are calculated separately in Scotland using the rateable value, which is set by a local assessor, and the ‘poundage rate’, which is set by the Scottish government.

In a recent letter to Melissa Tatton, Chief Executive of the Valuation Office Agency (VOA), Nicky Morgan, Chair of the Treasury Select Committee, labelled the sending of backdated staircase tax bills to firms as ‘unfair’.

In response, Ms Tatton revealed that, of the 11,000 rates that had to be reviewed, 5,500 firms saw their rateable value rise as a result of the staircase tax, 4,100 experienced an increase of less than 10%, and 1,400 saw a rise of more than 10%.

The Federation of Small Businesses (FSB) had previously called for the staircase tax to be axed. The business group welcomed the Chancellor’s remarks: Mike Cherry, National Chairman of the FSB, said: ‘The staircase tax has heaped misery on thousands of small businesses that happen to occupy split workspaces.

‘The Chancellor’s words will come as welcome relief to the desperate firms who had absolutely no idea that bill hikes were coming down the line.’

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Data reveals confidence amongst UK small businesses has ‘plummeted’

Confidence amongst UK small firms has fallen to its lowest level since the aftermath of the EU referendum, data published by the Federation of Small Businesses (FSB) has revealed.

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According to the FSB’s latest Small Business Index (SBI), confidence fell to +1 during the third quarter of 2017, down from +15 in the second quarter.

63% of small firms identified the domestic economy as being a ‘barrier to growth’, whilst 35% highlighted consumer demand as being an obstacle to growth.

The SBI also revealed that 13% of small firms now expect to either downsize, hand on or close their business. Meanwhile, 70% of businesses have reported an increase in operating costs: labour, taxation and rent have all been cited as having contributed to this rise.

Mike Cherry, National Chairman of the FSB, commented: ‘Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike.

‘With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.

‘Small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, any new tax grabs or loss of relief for entrepreneurs would exacerbate existing challenges.’

Backdated ‘staircase tax’ bills ‘unfair’ to small businesses

The Head of the Treasury Select Committee, Nicky Morgan, has labelled the sending of backdated business rates bills to small businesses with offices on multiple floors ‘unfair’.

Termed the ‘staircase tax’, businesses with offices on multiple floors of a commercial property now receive separate business rates bills for each floor they occupy, provided the areas separating the offices are communal. Some firms in England and Wales have seen their business rates rise as a result.

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The Valuation Office Agency (VOA) determines firms’ business rates. In a letter to Melissa Tatton, the VOA’s Chief Executive, Ms Morgan enquires into what is being done to soften the impact of the rates, and how many businesses will be affected by the staircase tax.

Ms Morgan stated: ‘It seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private.

‘It seems particularly unfair for the increase in rates to be backdated.’

Commenting on the staircase tax, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘No small business should receive a sudden tax hike of 5,000% simply because a workplace has been separated, for years, by a communal area, stairway or lift.

‘Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises.

‘This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently – to correct this defect in the UK tax system.’

Government outlines plans for data sharing between UK and EU post-Brexit

The government has outlined new arrangements for the protection and exchange of personal data between the UK and the EU once Britain has left the bloc in 2019.

A ‘unique approach’ to data protection and data sharing between the UK and the EU has been put forward by the government, which will help to ensure ongoing competitiveness, job creation and innovation.

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The approach would reflect the ‘unprecedented alignment’ between British and European law, and will put into place ‘high data protection standards’ at the point when the UK leaves the EU.

A new UK-EU model for exchanging and protecting personal data has been put forward by the government, which will permit information to continue to be exchanged in a ‘safe and regulated way’, and continue to protect individuals’ privacy. The government stated that the model won’t impose ‘unnecessary additional costs to business’.

Commenting on the approach, Matt Hancock, Minister for Digital, said: ‘The UK is leading the way on modern data protection laws and we have worked closely with our EU partners to develop world leading data protection standards.’

However, the Federation of Small Businesses (FSB) has warned that small firms require support to ensure that they are ready for new data protection rules. The General Data Protection Regulation (GDPR) is set to come into effect in May 2018, and will require businesses to safeguard the collection, storage and usage of their clients’ personal data.

Mike Cherry, National Chairman of the FSB, said: ‘We know that many small businesses have concerns about the incoming GDPR and many are simply unaware of the scope of the changes. There is a clear and present danger that companies could inadvertently face a fine if action is not taken to provide support and guidance to help them properly prepare for data protection changes.’

FSB urges government to delay National Living Wage rise

downloadThe Federation of Small Businesses (FSB) has called on the government to consider whether forthcoming rises in the National Living Wage (NLW) rate may need to be delayed if the economy cannot bear the pace of change.

 

By 2020, the NLW will have risen to £8.75 per hour. The business group has suggested that any risk to the UK economy should be ‘built into the next NLW increase’, which is currently scheduled for April 2018.

 

The NLW should not rise any higher than £7.85 next year, the FSB has suggested.

The call to delay further increases comes following the FSB’s publication of new research, which revealed that 64% of small firms affected by the NLW have taken lower profits in order to meet the latest rate rise.

43% of small businesses have had to increase their wages to meet the demands of the NLW, the research also suggested.

Mike Cherry, National Chairman of the FSB, said: ‘Small employers have demonstrated their resilience in meeting the challenges set by the NLW, with many cutting their margins or even paying themselves less to pay their staff more.

‘In sectors where margins are tight, small firms are resorting to more drastic measures to cope with the NLW.

‘It’s vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation. Cost pressures on small businesses are building, and with most recent economic indicators underperforming, we are now facing the reality that the NLW target may need to be delayed beyond 2020.’

Significant number of government suppliers sign up to Prompt Payment Code

32 of the government’s biggest suppliers have signed up to the Prompt Payment Code, thereby committing to pay 95% of their invoices within 60 days.

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The government estimates that small and medium-sized enterprises (SMEs) are currently owed more than £26 billion in overdue payments.

Signatories of the Prompt Payment Code promise to pay on time, without attempting to change payment terms retrospectively. The government revealed that the 32 suppliers will aim to pay within 30 days, and will work towards making this the norm.

Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), commented: ‘It is good to see the government fulfilling one of its manifesto pledges by getting big government contractors to sign up to the Prompt Payment Code.

‘What the small business community needs now is further action to give the voluntary Prompt Payment Code even greater teeth. The government should make it mandatory for all FTSE 350 businesses to sign up to the Prompt Payment Code and introduce a tough penalties regime for repeat offenders of poor payment practices.’

Government establishes new Brexit business group

The government has created a new business advisory group, comprised of five major UK business groups.

The Confederation of British Industry (CBI), the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC), the Institute of Directors (IoD) and manufacturers’ organisation the EEF make up the new business group, and their director generals will meet weekly with the Business Secretary, Greg Clark.

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During a recent parliamentary session, Mr Clark reported that he had met with businesses, business leaders, employees and investors around the UK since the Brexit vote. The new group will seek to ensure that business has more input into the Brexit negotiations.

Dr Adam Marshall, Director General of the BCC, hopes that the new business advisory group will also help to achieve a ‘business-friendly’ Brexit outcome that addresses firms’ ‘real-world needs’.

Commenting on the creation of the new business group, Mr Clark said: ‘The government is creating a new EU exit business advisory group to ensure business is not only heard, but is influential throughout the negotiations.’

Meanwhile, Stephen Martin, Director General of the IoD, stated: ‘A good Brexit outcome is one that puts the economy, jobs and prosperity right at the centre of the negotiations, so we wholeheartedly welcome the formation of this advisory group by the government.’