Thinking cap still on in terms of business rates shake up

The government has published its call for evidence as part of its consultation on business rates

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown comments on what might lie ahead:

‘’The chancellor has still got his thinking cap on as far as business rates are concerned and he’s not short of ideas to mull over with a long list of problems analysed by businesses large and small. From the complexity of the rules and dissatisfaction with the billing process, to the frequency of valuations and the abuse of reliefs available, the dissatisfaction with the current system is coming through loud and clear.

One key decision has been made though; the new revaluation will take place in 2023, based on property values as of April 2021 which will be a salve for those businesses worst hit by the crisis. But as the crucial decisions on the business rates system have been kicked into the Autumn’s long grass, a particularly thorny issue of a new online sales tax has been waving in the wind above the rest. While many business rates payers have been desperate to cling onto any financial lifeline on offer, others have thrived on the shift to digital sales and there is increasing clamour for a sliver of those profits to be redistributed via a new online sales tax.

However businesses surveyed said although it might level the playing field it wouldn’t save the high street, and that it should not be introduced on this basis alone. A suggested land value tax, a more radical measure the Treasury has been mulling over as another potential replacement for business rates got a widespread thumbs down from respondents who said the drawbacks would be significant.

With record savings expected to be unleashed once the economy does open up again, the cavalry does seem to be on the horizon with pent up demand from consumer likely to help many struggling businesses. But even when it arrives, there are still likely to be casualties and calls on the government to provide a fairer system of business rates are likely to keep coming thick and fast.’’

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