Chancellor Philip Hammond has come under fire following the announcement that business rates will be increased. He has been urged to consider a transitional period or some form of loan for smaller businesses who might struggle to pay.
Business rates were due to be reviewed in 2015, however this was postponed. The increased business rates are planned to become effective from 1 April 2017. There has been much discussion about how much the rates will increase by and the new appeals process for businesses who feel their valuation is inaccurate
The government has said that business rates will stay the same or fall, and there will be 600,000 businesses that will no longer be affected. This has been followed by a statement from the Department of Communities and Local Government who have emphasised that the government will not financially benefit. It also states that business rates will be calculated using the Consumer Price Index rather than Retail Price Index. This is anticipated to save businesses around £370 million.
However, these figures have been criticised. Andrew Bridgen, a Conservative MP, has spoken out about the expected 11% rise for businesses in his constituency and expressed concerns that some businesses in London and the South East will face 400% increases over the next five years.
With a group of Conservative rebels threatening to reject the Spring Budget, the Chancellor has responded explaining he is in ‘listening mode’, and understands that fundamental reforms to the current system are needed to ensure online retailers do not benefit to the detriment of the high street.
Hammond has promised to confront the “challenge” presented by internet giants owning property in rural areas and therefore avoiding higher business rates. He is expected to take measures in the Budget (presented on 8 March) to help those who will be worst affected by the business rate hikes.
The UK has seen considerable growth to the digital economy and this presents a real issue for tax. The Chancellor is expected to respond to this issue within his Spring Statement and address the government’s plans to level the playing-field for small businesses, the high street and online business.
Join us at the Budget Breakfast to find out how the Chancellor responds and what the government plans to do to close the tax gap and level the field.