Government paves the way for reform of business rates

The review will examine the structure of the current system which is paid annually on 1.8 million properties in England.

The Chief Secretary to the Treasury, Danny Alexander, today launched the most wide-ranging review of national business rates in a generation - paving the way for changes to how businesses across England pay the tax.

The review, set to report back by Budget 2016, will examine the structure of the current system which is paid annually on 1.8 million properties in England. The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property.

The Chief Secretary launched the review during a speech to local businesses in Cambridge.

Chief Secretary to the Treasury Danny Alexander said: "Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

"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.

Today’s announcement follows the Government’s commitment in December 2014 to conduct a review of business rates and implement a £1 billion package to reduce the cost of business rates in 2015-16, with particular support for the smallest businesses and the high street.

From the 1 April 2015 the government is:

- increasing help for the High Street: increasing the business rates discount for smaller retail premises with a rateable value of £50,000 of below to £1,500 to 31 March 2016 benefiting around 300,000 shops, pubs, cafes and restaurants.

- doubling small business rate relief for a further year to 31 March 2016 to provide support for 575,000 of the smallest businesses, and ensuring 385,000 small businesses pay no rates at all

- capping the rise in the business rates multiplier at 2% to benefit all businesses.

- extending transitional rate relief to support 16,000 small business facing significant bill increases due to the ending of transitional rate relief.

Commenting on today’s announcement that the Government will examine the structure of the current business rates system Helen Dickinson, British Retail Consortium Director General, said: “We very much welcome this further announcement of a complete review of the business rates system. This is, after all, a system that acts as a major drag on our economy while punishing our local high street.

“We supported the government’s decision back in December to take a proper look at the inequities of this system and today’s announcement from the Chief Secretary of a ‘radical’ review is great news for all of us who want a fairer, more efficient and sustainable system.

“From the breadth of the questions that the review is to address it’s clear that the government intend to take a broad and open-minded approach to finding solutions. That will meet with strong support in the business community.

“To guarantee that this review is a success it’s absolutely crucial that the government seeks authoritative and independent analysis as it progresses, with solutions based on the objective consideration of supporting evidence.

“Taking this approach will guarantee that the government’s own assessments are robust and that the necessary sweeping reforms deliver a fairer and sustainable system, one that ensures that the tax more closely reflects the wider economic conditions and allows businesses to remain competitive.

“With cross-party political support for a fundamental review of business rates I’m confident that we can bring about badly needed change, and in doing so securing the investment, jobs and growth that have been held back by the burden of this pernicious tax.

“We look forward to working closely with government and the review process as it progresses.”