Could business rate reform boost the UK economy?
Potential business rate reforms could have a major impact on companies across the UK, especially those with tight financial constraints.
Under government proposals, the amount that companies pay could be recalculated more frequently so that tax is deducted in line with the economy.
It would mean that businesses would not be forced to pay as much when the economic conditions are more difficult, making funds available to focus on business survival.
A growing number of companies have considered insolvency procedures since the recession started in order to trade for as long as possible and many businesses have continually called for more frequent checks on business rates.
Chancellor George Osborne pledged to reform business rates in last year’s Autumn Statement, alongside a £1.1bn set of measures to ease the pressures caused by business taxes.
The prospect of significant reductions
The government has now published its ‘terms of reference’ which are up for review, and if approved, businesses could see significant reductions in what they need to pay.
David Gauke, the Exchequer Secretary to the Treasury, has said the review will consider how business rates are administered “with a view to strengthening its responsiveness to changes in property values and its simplicity and transparency to business ratepayers”.
Part of this will include a study into the frequency of revaluations, as well as possible changes to the methods involved.
On top of this, it would also consider organisations that should be eligible for relief or exemptions, meaning any changes would assist the businesses concerned.
The key part of the review is that it gives businesses a voice so that they can air their concerns regarding business rates and suggest improvements to the system.
The tax burden could take a toll on many businesses and it is certainly something that companies need to consider carefully. With this in mind, sharing the responsibility is an important part of raising the funds required.
Vince Cable, the Business Secretary, believes that the review can help to meet the concerns of small businesses that will form a major part of the economic recovery.
“I am particularly pleased that the review will look at frequency of valuations as it is the out of date property valuations that is a real problem, especially for businesses in deprived areas where rents have fallen,” he explained.
By Phil Smith