Government plans for a major overhaul of business rates have been drastically reduced, with only small scale tweaks expected to be announced by the Chancellor, Rishi Sunak, later this month.
The Treasury is expected to publish the review into business rates as part of the upcoming Budget on 27 October, after it was delayed beyond the earlier Budget in March 2021.
According to The Telegraph, minor changes to the system are still expected to be announced, but larger reforms have been shelved until an unknown date so ministers and officials can undertake extensive research and further work.
In a joint statement ahead of the chancellor’s post-lockdown Budget, the Confederation of British Industry (CBI) and 41 other trade groups are demanding fundamental changes to the system, which taxes companies based on their premises.
The trade groups that represent more than 260,000 businesses and 9 million employees between them warned that failure to take action now would weigh on the government’s ambition to create a high-wage, high-productivity and high-investment economy.
John Webber, Head of Business Rates at Colliers said: “Reports that the Government will not be announcing any major overhaul of the Business Rates system in the forthcoming Budget is massively disappointing. It is frustrating that 18 months into a consultation which has already been delayed four times in the last year, that the Government is still not ready to respond to industry calls for proper reform. Delayed action will be a further hit to businesses – it will cost jobs and will do nothing to save the high street.”
“Obviously we will need to wait to see what is in the detail in the Budget- but we would hope “tinkering” would include a recognition that in current form business rates are too high and that the multiplier at current levels of 51p in the pound is unsustainable for business. A 50p plus tax is just too high. The Chancellor, at the very least, should commit to a reduction of the multiplier to around 30p when he stands up at the end of the month. That would provide a significant relief to businesses across all sectors, particularly those in retail and hospitality”
Shadow chancellor Rachel Reeves previously announced she would freeze business rates next year if she was in No 11, whilst also offering a cut for small firms, paid for by hiking digital taxes. She committed the next Labour government to abolishing business rates, using the proceeds of a global deal on taxing multinational firms.