Further to the Chancellor’s announcement at last year’s budget, the current business rates now look set to be reformed after a ‘fundamental review’. Following a call for evidence, an interim report is due at the end of March with a final report due in the autumn. But what can we expect?
What we know for sure is that business rates need a lot of reform and bringing up to date. Touted as unfair in many cases, business rates have been hiked out of sync with inflation since 1990. They need to better reflect the economic circumstances all businesses are currently facing as well as reducing the burden on small businesses going forward.
While reform is already overdue and urgently needed, the COVID-19 pandemic has highlighted the further need for support and relief to prevent wholesale business closures. Calling for evidence after last year’s budget, Chancellor Sunak welcomed input and views from business stakeholders on key issues, including:
• how the business rates system currently works
• reforming the rates multiplier
• looking at alternative ways of taxing business properties
• alternative taxation ideas
• any other issues that need to be addressed
With the government now considering all the evidence it’s been presented with, an interim report is due to be published on 23rd March. This will be a summary of the consultation responses and how things could pan out. But it allows for transparency and examination, as well as giving tax professionals “a better opportunity to feed into consultations and policy discussions, which will strengthen policy-making.”
Autumn fundamental review
Following the £280bn of COVID-19 support for the overall economy, businesses have already seen plenty of stimulus packages. These include a business rates holiday for the retail, leisure, and hospitality sectors (worth over £10bn), as well as a frozen business rates multiplier for 2021-22 (saving £575m for businesses over the next five years).
This year’s budget on 3rd March will be Sunak’s opportunity to outline the next stages of business support that should continue through the next financial year. It’s also widely acknowledged he’ll announce a further extension to the current business rates holiday for the retail, leisure and hospitality sectors.
Beyond this, the government are remaining tight-lipped on business rates reform. Nothing is being confirmed or denied, so we’ll have to wait for the interim report to see the proposed plans and whether anything changes thereafter. It will then be the final report of the ‘fundamental review’ in the autumn which should show us how ambitious central government is willing to be.