Chancellor Philip Hammond has hinted at the possibility for reform to business rates in his Spring Budget speech, but revealed little about what the business community could expect from the changes.
Hammond said that there was “scope to reform the revaluation process” in order to “avoid the dramatic increases that the present system can deliver”, with the reform involving revaluating the rates more frequently than under the current system.
But, the chancellor said that the government’s “preferred approach” would be outlined “in due course” and would be subject to consultations before the next revaluation takes place in 2022. More details are expected to be announced at the Autumn Budget this year.
Concessions for small business, pubs, local authorities
Acknowledging concerns about revaluation, Hammond announced measures aimed at providing support to business hit hard by the process. This included concessions for small businesses, pubs and local authorities.
Businesses losing small business rate relief will see increases to their bills limited to £600 a year or the transitional relief cap, whichever is greater. Local authorities will receive funding of £300m to support local individual cases, and pubs with a maximum rateable value of £100,000 will be provided with a £1,000 discount on business rates bills for one year from April 2017 – a measure benefiting 90% of all pubs in the UK.
Reaction to chancellor’s relief measures highlighted that the initiatives were only temporary, whereas long-form reform was crucial.
Michael Wistow, partner in the global tax practice at law firm White & Case said: “The mitigation measures announced to remove hardship are better than nothing, but are only adding sticking plasters to a tax that is clearly failing, and needs proper, urgent reform.”
Charles Beer, managing director of Alvarez & Marsal in London commented: “The chancellor’s announcement on business rates is equivalent to handing out a sticking plaster when the patient needs surgery. Property taxation in the UK – from business rates to council tax, stamp duty, CIL and s106 – needs fundamental long-term reform. Today’s announcement is merely short-term tinkering at the margins.”