Chancellor provides business rates support for the few rather than the many
The promised business rates reforms have proven to be as elusive as Godot with the Chancellor once again leaving this draconian £31 billion tax burden largely unchanged.
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Despite the weekly closure of household names in the retail industry, the Chancellor has only offered relief to small retailers who have a Rateable Value of £51,000 or less.
However, even this is far less generous then one would expect as 60% of these assessments are already below the exemption threshold of £12,000.
The Chancellor also announced a new 2% tax on digital services companies for any UK online sales, this is set to bring in £400 million, but how this will re-balance the difference in costs incurred by traditional high street retailers and online retailers is uncertain.
The Chancellor did highlight that Local Authorities were unable to exercise discretionary relief for themselves but decided not to change this and instead created a new mandatory relief to apply to all Toilets that are open to the public.
Although welcome, it could have been an opportunity to address the inequitable position on state schools where they get no rates relief and Free Schools qualify for 80%.
Summary of Budget Policy Announcements for Business Rates
- Retailers with a Rateable Value of £51,000 or less to qualify for a discount of one third off their business rates from April 2019.
- Mandatory 100% Rate Relief to be extended to all toilets that are made available to the public irrespective if they are public or privately owned.
- Local Newspaper Businesses will have their £1,500 business rates relief extended for another year.
- Review announced of Business Rates Charged on Self Catering and Holiday Home Let Accommodation.
In view of the uncertainty over Brexit it is difficult to see how businesses are being supported by pressing ahead with increasing the tax by another £680 million from April next year. The Chancellor should at least have frozen the tax at the current level.
Keith Cooney is Knight Frank's National Head of Business Rates. How can we help?