The British Property Federation (BPF) has commended the Chancellor for announcing a ‘structural review’ of business rates in today's Autumn Statement.
As business rates continue to be a burden on large and small business across the UK, the BPF has been one of a number of bodies urging the government to commit to a fundamental reform of the system, believing this to be the best way to restore fairness and to create a beneficial environment for investment and growth.
However, the BPF urged that any future changes to the system should not take place purely to help high street retailers to compete with internet outlets, and advised reform should benefit all rate payers, not just a subset of them.
Liz Peace, Chief Executive of the BPF, said:
“For the sake of business competiveness and Government efficiency the business rates system needs to change. We need a system that is more responsive, both to changes in the economy and to the relative position different businesses find themselves in.
“Basing a property tax on nine-year-old valuations is simply unfair and inefficient, and other countries have shown that with the use of technology you can design a far more responsive system. The compounding effect of annual RPI increases is also meaning that a higher proportion of taxation each year is coming from business rates, sucking the blood from our high streets and eroding many other businesses’ competitive edge.
"Undertaking a root and branch review of the system is a big decision which many politicians have shied away from, and it makes today's announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”
A recent report published by the BPF outlined a number of recommendations that it would like government to implement:
1. A move to annual uprating by CPI now, pending review and consideration of the best measure that will reflect growth.
2. To restore the pre-2008 availability of relief from empty property rates (100% for industrial properties, three month grace period followed by 50% for all others).
3. Moving to a system of annual revaluations.
4. Extending business rates relief for small businesses by taking the least valuable properties (with a rateable value of less than £12,000) out of business rates entirely under a system of annual revaluation.