BUSINESS RATES: WHERE DO WE GO FROM HERE?

Andrew Hulbert muses on the impact a new Government and its promises to replace the Business Rates system will have on the ratepayer.

It has been something of a whirlwind three weeks since we woke up to a new dawn under a Labour government, and all of us, whether we are sceptical or enthusiastic, have been keeping a keen eye on developments to see just how a new manifesto will impact our day-to-day lives.

In terms of the property sector, the main focus has been on planning and development, with a definite intention to get Britain building again. But in terms of our finances, our Rating team has been keeping a keen eye on the new stance on Business Rates, and how any changes will affect the ratepayer.

The Labour Manifesto states that “The current business rates system disincentivises investment, creates uncertainty and places an undue burden on our high streets. In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way.

“This new system will level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship.”

With an incredibly high collection rate – Business Rates brings in a revenue of around £22.9 billion per year after reliefs in England alone – it seems a bold move to replace the system.

The current Business Rates system has existed for its current format for a considerable period of time, and while it has become cumbersome in recent years due to continued attempts to reform it by previous cabinets, it does work as a valuable and efficient taxation system that generates vital revenue across the country.

The previous Government had already implemented the process of a reform with the introduction of three-year valuations and, a somewhat more worrisome move toward ratepayers themselves providing essential information to the Government, as well as additional funds being allocated to the VOA to improve its systems and a three-yearly revaluation cycle.

Our expert Business Rates team are big advocates of reforming the system. We understand only too well the frustration that ratepayers experience when engaging with the VOA on every level, particularly when it comes to the appeal system, so we will be watching with eager eyes to see what changes are implemented in the coming months.

There are numerous challenges and opportunities to implement an effective and far-reaching reform of the Business Rates system, and we fully support that, but replacing a valuable and efficient taxation system altogether seems an ambitious and entirely unnecessary step.

We believe that a system which reduces the tax burden on small and medium sized businesses but ensures larger business, particularly those which have benefitted from the boom in internet sales, pay their fair share, would be beneficial to us all.

Featured image: iStock/mattjeacock