The chief secretary to the treasury Danny Alexander has announced the most wide-ranging review of national business rates in a generation. The review will examine the structure of the current system which is paid annually on 1.8 million properties in England. The review will focus on how businesses use property, what the UK can learn from other countries local business rates and how they can modernise the current scheme to reflect changes in the value of property.
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Business rates were first introduced in 1990 and their main aim is to help raise revenue to pay for local services. They are paid by occupiers of non-domestic properties including shops, offices, warehouses, factories and guest homes. In the financial year of 2013-2014 £20.5 billion was brought in from business rates.
The announcement follows widespread criticism of the current system, where rates are charged to retailers based on the value of their shop or other commercial property. The arrangement means that companies with similar turnovers can pay dramatically different amounts for business rates due to their properties varying ‘rateable values’ depending on the size and location of their premises.
Chief Secretary to the Treasury Danny Alexander said: “The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.”
The announced business rates review follows the government’s commitment in December 2014 to conduct this review and implement a £1 billion package to reduce the cost f business rates in 2015-16.
From the 1st of April the government is:
- Increasing help for the high street by increasing the business rates discount for small retail premises. This is expected to benefit around 300,000 shops, pubs, cafes and restaurants.
- Doubling the small business rates relief for a further year to 31 of March 2016 to provide support for 575,000 of the smallest businesses. Ensuring 385,000 small business will pay no rates at all.
- Capping the rise in the business rates multiplier at 2% to benefit all businesses.
The findings of the review are expected to be announced in the 2016 budget
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