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Industry welcomes Treasury plans to review business rates

Published:  16 March, 2015

Industry bodies have welcomed the government's ambitious review of business rates, which were laid out today by The Chief Secretary to the Treasury, Danny Alexander.

Industry bodies have welcomed the government's ambitious review of business rates, which were laid out by The Chief Secretary to the Treasury, Danny Alexander, yesterday.

The review will look at the how businesses use property, and how the current system could be modernised to better reflects changes in the value of property. As well as looking at alternatives to the property based tax system, it will also look at how other countries manage their local business taxes to see if the UK could learn from these and see if local authorities incentive can be built in to encourage growth.

Helen Dickinson, British Retail Consortium Director General, said the overhaul would be widely welcomed across the business community as the current system acted as a "major drag" on our economy and punished the local high street.

"We supported the government's decision back in December to take a proper look at the inequities of this system and today's announcement from the Chief Secretary of a 'radical' review is great news for all of us who want a fairer, more efficient and sustainable system," she said. "From the breadth of the questions that the review is to address it's clear that the government intend to take a broad and open-minded approach to finding solutions."

She added that it was crucial the government seek authoritative and independent analysis to ensure the reforms delivered a fairer and sustainable system, that ensured the tax reflected the wider economic conditions and allowed businesses to remain competitive.

John Cridland, director-general of the CBI, said the review would go further than measures already announced in the Autumn Statement that are due to come into force in April. He added that the CBI would be making the case for removing the smallest firms from paying business rates completely, linking rates to CPI rather than RPI and introducing more frequent valuations. "This would go a long way to achieving a more competitive business rates regime that incentivises business investment and supports the high street," he argued.

Brigid Simmonds of the British Beer & Pub Association said a wide ranging review was sorely needed, but the Government needed to think about widening the net and putting a system in place that is responsive to the pressures on small and struggling businesses. "In the pub sector we know all too well how the rates burden does not respond quickly enough to an adverse change in the trading climate. We will certainly be using the opportunity to put forward proposals to address these challenges, and the huge rates burden on pubs," she said.

From April new business rates discount for smaller retail premises will come into effect, which the government says will benefit around 300,000 shops, pubs, cafés and restaurants. It is also doubling small business rate relief for another year to 31 March 2016, capping the rise in the business rates multiplier at 2% and extending transitional rate relief to support the 16,000 small business facing significant bill increases due to the ending of transitional rate relief.