BRC: Business rates reform welcome but no immediate relief in sight

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The British Retail Consortium (BRC) has responded to the Chancellor’s Budget, announced March 16.

he BRC says the Budget recognises that the business rates system is no longer fit for purpose with several new measures announced by the Chancellor that are designed to help high streets and town centre shops. However, the package of measures to reform rates will not benefit retailers and the local communities that they serve until 2020.

The government concluded its 27-month review of business rates and has decided to reduce the burden on ratepayers in England over the next five years and ensure that the smallest businesses pay no rates at all. The plans also include more frequent revaluations, which was an underlying principle of fundamental reform and will be welcomed by rate payers who want the system to better flex with the economic climate, the BRC adds. The government did not confirm when it intended to introduce the change but will now consult stakeholders including businesses and local government.

The government also announced that it will permanently double the Small Business Rate Relief from 50% to 100% and increase the thresholds. Businesses with a property with a rateable value of £12,000 and below will receive 100% relief. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief. There will also be an increase in the threshold for the standard business rates multiplier meaning properties with a rateable value of £51,000 and below will not be responsible for paying the 1.3 supplement that is used to fund the current SBRR scheme.

BRC_MasterLogo_Purple_CMYK_aw (2)Taxes for all rate paying businesses will be cut through a switch in the annual indexation of business rates from RPI to be consistent with the main measure of inflation, currently CPI. This move is expected to save retailers close to £100 million a year, however, the move will not kick in until April 2020.

In a preliminary response to the Chancellor’s Budget, BRC Chief Executive, Helen Dickinson, said: “Taking small businesses out of the business rates system; switching the annual indexation to CPI and moving to more frequent revaluations are all welcome moves towards fundamentally reforming the business rates system. Today’s budget was a recognition that the system is no longer sustainable and is in desperate need of fundamental reform. Retailers will have noticed that any of the intended support will not be felt for another year and more, however.

“I would encourage the government to maintain its level of ambition of reform and look at reducing the multiplier as soon as possible. This is a tax after all, which when it rises next month, will be at nearly 50% of annual rental values. The plans for reforming business rates are still at odds with the government’s aspiration for a low tax economy. Further moves are now needed to bring the burden down so that the tax is internationally competitive and to quote the Chancellor from today, ‘creates jobs and enterprise and leaves us prepared for the challenges ahead’.

“By following through with a reform programme, retail will be better placed to continue keeping prices low and support the Government to deliver its programme that includes the introduction of the National Living Wage and Apprenticeship Levy policies. The impact on local jobs and consequent social cost could be significant, especially in vulnerable areas. As they stand, these policies together greatly risk accelerating outcomes we seek to avoid.

“Only fundamental reform of the system will realise the benefits of continued high availability of local jobs especially in deprived areas, improved productivity, rising exports, the delivery of training and apprenticeships and, critically, the reinvention of our high streets and town centres.”

On plans to devolve business rates, Helen added: “We welcome engagement with elected city-wide mayors when considering a business rates supplement to fund local infrastructure projects. A business ballot could help ensure the entire business community is appropriately consulted before a business rates premium is introduced.”

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