Budget 2021: High Street given a boost as business rates slashed
The temporary tax cut will apply to over 90 percent of all retail, hospitality and leisure businesses
Businesses in the retail, hospitality and leisure sectors will receive a 50 percent rates discount for one year, announced Chancellor Rishi Sunak as he delivered his Autumn Budget to the House of Commons on Wednesday.
Eligible businesses will be able to claim the discount on bills up to a maximum of £110,000 – a tax cut worth almost £1.8bn in total.
The cut formed part of a package of business rate reforms. In addition, revaluations will take place every three years as of 2023, and a new investment relief will be introduced to encourage the adoption of green technology.
Aside from the coronavirus relief measures, this is the single biggest cut to business rates in over 30 years, said the Chancellor. He also remarked that the cut contributes to a “simpler, fairer tax system”.
However, whilst welcoming the reforms, industry participants have argued that key omissions in the package are clear.
“With revaluations moved to every three years, the Chancellor has improved the system. However, beyond the immediate cut, this still leaves retailers paying almost five times more in business rates than their share of the economy,” said Chris Sanger, head of tax policy at EY, branding the measures a “halfway house”.
“The half price offer for the next year will help, but does not address the long-term issue.”
Similar concerns were expressed by Marvin Rust, head of tax at Alvarez & Marsal, again noting missing pieces in the Autumn Budget announcement.
“Business rate relief will be welcomed across the retail, hotel and leisure sectors, but calls to extend the period where the lower VAT rate on the food, accommodation and leisure sectors have disappointingly gone ignored.”
Meanwhile, criticism has been aimed at numerous other areas of the Chancellor’s Budget. These include a lack of meaningful investment in recovery, levelling up and net zero initiatives.
“Despite his rhetoric and flurry of piecemeal spending announcements, the Chancellor’s overall package reveals his reluctance and real failure to invest enough in achieving his stated aims,” said Carys Roberts, executive director at the Institute for Public Policy Research.
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“This budget failed to reset the economy and put it on track to a more prosperous, low carbon and fair future.”
Sunak also told the MPs that the Office for Budget Responsibility (OBR) has revised its forecast for the UK economy. It now expects GDP growth of 6.5 percent, up from its original estimate of four percent.
Similar revisions were made to unemployment projections, with the OBR expecting unemployment to peak at 5.2 percent, revised down from 12 percent. That means over two million fewer people out of work than previously feared.
