Osborne slashes business rates

iStock_IvelinRadkov_BT
4

The Chancellor has announced plans to scrap business rates for properties with a rateable value of £15,000 or less from April 2017.

The move comes at the end of a two-year consultation on the issue and has been broadly welcomed by the small business community.

The measure, announced as part of a raft of Budget measures designed to appeal to small businesses, more than doubles the current small business rate relief threshold of £6,000, and will be introduced permanently rather than on a temporary basis.

Business rates will also be linked to the Consumer Price Index (CPI) from 2020, shifting from the current Retail Price Index (RPI). The move is expected to deliver savings of £1.6bn over the next five years, a measure for which many business lobby groups, including the CBI, has long campaigned.

Osborne also announced that the government planned to "radically simplify" the administration of business rates.

The move was welcomed by ACCA head of taxation Chas Roy-Chowdhury: “Finally we’ve seen some movement on this, with business rates relief more than doubled to £15,000, meaning more than 600,000 small businesses will pay not business rates at all.”

All businesses will benefit from a cut in corporation tax to 17% by 2020, a percentage point lower than was announced in last summer’s Budget.

A ‘marmite moment’

Chris Sanger, head of tax policy at EY, commented that the measures were a “marmite moment” for those paying business rates, with small businesses likely to reap 95% of the £6.7bn cut coming from the long period of consultation, leaving large businesses with only the shift from RPI to CPI.

“Manufacturers and larger retailers will be disappointed with the lack of action by the government”, continued Sanger, “with those sectors currently paying 40% but only constituting 16% of the economy. This retains the distortions in the current system, deterring manufacturers from improving their buildings and penalising the largest bricks and mortar retailers.”

Devolution revolution

The Chancellor also continued his ‘devolution revolution’, stating that by 2020 all local government resources will be drawn from their own area.

The Greater London Authority will move to full retention of business rates from April 2017 - three years earlier than previously thought – while the government will also pilot the approach in Liverpool and Greater Manchester.

“The decision to devolve business rates to the Greater London Authority in London by 2017 is interesting”, commented Chas Roy-Chowdhury. “It is right that rates are retained by the area in which they are paid, although we could end up with areas of the same countries competing against each other, and when you have competition there is always a loser.”

Tom Herbert
Business Editor
AccountingWEB
Share this content

Replies

Please login or register to join the discussion.

avatar
By NH
16th Mar 2016 16:23

Marmite?

Whenever I have Marmite it makes me squint and raise my eyebrows like I have just swallowed a lemon - is that what he means?

Thanks (0)
16th Mar 2016 16:45

Marmite budget

Not a fan then NH...?

Thanks (0)
avatar
17th Mar 2016 11:39

England only

I could be wrong but I think these measures only apply in England.  The devolved administrations make their own non domestic rate policy. I wonder when they will announce equivalent changes.

Thanks (0)
avatar
17th Mar 2016 12:08

Rateable value of £15000 or less from 2017

Won't get too excited as I look at the Notice we received 2 weeks ago

"Your Draft Rateable Value is coming

The VOA (executive agency of HMRC) is in the process of updating the rateable values of all business properties....... using the new rateable values from 1 April 2017"

current value is £13250 (yay!) hmmmm....wonder what the VOA will come up with for 2017 though??

Give with one hand, take (more?) with the other......

Perhaps we small businesses should savour that massive annual 1.3p for each £1000 CRV reduction?

Thanks (1)