Business Rates - a representation to the Chancellor for the 2020 Budget


British BIDs [Bb] is the trade body for Business Improvement Districts [BIDs] in the UK and represents 330 established BIDs. We are thus the voice for over 128,785 levy paying businesses across the country, with a combined rateable value of over £8.3billion. We are making this representation to the Chancellor with the aim of commenting on current business rates policy and suggesting new policy ideas for inclusion in the next Budget. We make three general policy requests in relation to the budget, and six specific requests on business rates processes.

We believe the Non-Domestic Rates system [Business Rates] to be a major problem in the operation of business and commerce in the country and that the financial burden rates place on business is unacceptable and must come down.

We note with keen interest that the government said that:

“We will cut the burden of tax on business by reducing business rates. This will be done via a fundamental review of the system. As a first step, we will further reduce business rates for retail businesses, as well as extending the discount to grassroots music venues, small cinemas and pubs. That means protecting your high street and community from excessive tax hikes and keeping town centres vibrant” . We clearly welcome the changes that have already been announced and look forward to their impact.

As part of that discussion we note that the House of Commons Select committee High streets and town centres in 2030 said that “high street retailers are paying more than their fair share of tax, while online retailers are not contributing enough: … Amazon UK’s business rates amounted to approximately 0.7% of their UK turnover, while high street retailers are paying considerably more, with business rates as a proportion of turnover ranging from 1.5% to 6.5%” . The Government announced the introduction of a Digital Services Tax in April 2020, to address issues related to historic avoidance of corporation tax. Media coverage suggests that this might now be in doubt, which is of major concern, and we ask that the Chancellor looks carefully to retain, or indeed improve, on the existing proposals for a digital services tax.

However, this still does not address the imbalance between online and high street retailers. The Government needs to go further and move faster to level the playing field between online and high street retailers.

At the same time, the House of Commons Treasury Select Committee on Business rates asked that “Government set out its views on the fact that business rates provides one of the highest property tax takes in the OECD. In its response the Government should address the impact that the level of business rates has on the attractiveness of the UK as a destination for investment. It should also address the impact on business directly”.

Bb believe that there are some fundamental problems in the Business Rates system. The last business rates review followed a seven-year gap. When the property values were updated in 2017, the changes in the UK commercial property market since 2008 were passed on in one go, blunted only by some transitional reliefs . It thus made some very major changes to the cost of businesses; these changes vary greatly across the country, are opaque, are very different for different types of business, are not easily open to appeal, penalise innovation and investment, and are difficult for future planning.

We are also very conscious that the current residential Council Tax needs to be reviewed; it continues to be based on 1991 property values, and is thus highly regressive, with the highest Band H based on the deflated thirty-year-old property value of £320,000. This continues to be an absurdity when business rates are based on current property values and are reviewed every five years. 

Thus, Bb believes that businesses need several things from the fundamental review:

  • the localisation of business rates,
  • more frequent valuations,
  • a much simpler system for calculating and paying rates,
  • the ability to better capture the benefits of growth,
  • a reduction in the complexity of reliefs and
  • a removal of the inequity between high street and online retailers.

These various proposals can radically improve the existing business rates system in the short to medium term. 





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