The Chancellor has revealed roughly £7 billion worth of cuts to business rates following a review into the business property tax.
Rishi Sunak announced a series of changes for next year, including the cancellation of next year’s increase in the rates multiplier and a 50% cut to next year’s rates for most retail, hospitality and leisure businesses.
The Treasury announced the changes after its latest lengthy consultation into business rates, which saw a number of major retail bosses call for them to be slashed and an online sales tax be introduced.
The Chancellor did not go as far as to launch the tax but the Government has said it will now start an online sales tax consultation.
A new one year 50% business rates discount for retail, hospitality, & leisure sectors.
A tax cut worth almost £1.7bn and with Small Business Rates Relief over 90% of all these businesses will see a discount of at least 50%.
Taken together, today we cut business rates by £7bn. pic.twitter.com/DTQPvO3s3B
— Rishi Sunak (@RishiSunak) October 27, 2021
In the official Budget documents, it said that if a UK-wide online sales tax is introduced it would also “reduce business rates for retailers in England”.
Business rates are devolved across the nations within the UK.
On Wednesday, Mr Sunak told MPs that the cancellation of next year’s increase in the multiplier will save around £4.6 billion over the next four years.
His new set of changes also included a 50% business rates relief in England for retail, hospital and leisure properties, for up to £110,000 per business.
It said this will benefit around 90% of businesses across the sectors.
This will come after business rates reductions for firms in these sectors over the current financial year following the rates holiday during the pandemic.
Mr Sunak said the new temporary relief rate will take place for 2022-23 and be worth around £1.7 billion.
The Chancellor also highlighted that rates revaluations will now take place every three years, replacing current five-year gaps.
Jace Tyrrell, chief executive of the New West End Company, representing firms across London’s West End, said: “It’s encouraging to see the Chancellor finally act upon the need to reform the business rates system.
“Cancelling the inflation-linked rise to the multiplier may ensure that rates won’t go up this year, but they are still too high.
“Reducing the time between revaluations to three years is welcome, as is the short-term relief for investment in improvements and sustainability, but this falls far short of a fundamental review.
“This simply doesn’t meet the Government’s manifesto commitment to reduce the burden of business rates on business.”
Robert Hayton, UK president at the real estate adviser Altus Group, described the measures as “a compelling basket of support which will aid the recovery”.
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “It’s a mixed bag of announcements from the Chancellor which falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.
“With firms still stuck on property valuations from 2015, the move to a three-year revaluation cycle, supported by a properly funded Valuation Office Agency, is welcome and is a clear acknowledgement that rates have fallen well out of kilter with the wider property market.
“The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50% in England – is already far too high.”