Chancellor Promises Full Business Rates Review After 2015 Election.

What’s the one thing that raises the hackles of small businesses?

What get the blood of SME owners boiling? You won’t be surprised to learn that it’s business rates: as accountants we’re certainly not. Well last week’s Autumn Statement may yet hold some good news. SMEs may not have had all their wishes granted, but at least Chancellor, George Osborne, did commit to a full review of the business rates regime after the 2015 General Election, and as far as we can see that has to be good news.

So what exactly did the Chancellor say?

Well, firstly that he agreed to an extension of double relief for small firms and a continuing cap on inflation-linked increases. He claimed that by doubling this small business rate relief 500,000 firms will benefit, and what’s more 300,000 will pay no rates whatsoever. For good measure, he also added that inflation-linked increases will be capped at 2%, whilst high-street shops, public houses and cafes will see a £1,000 discount on rates increased to £1,500 next year.

How was this news greeted by the business community? Well, Phil Orford, chief executive of the Forum of Private Business (FPB) told the press:

“Business rates have been an ongoing concern for a large number of our members, with 55% in a recent poll seeing this significant barrier to business growth. It is good to see that the Chancellor has agreed with our suggestions of short-term measures to reduce the pain of excessive property taxation with a continued cap of two per cent, a £1,500 discount for retail properties and an extension to Small Business Rates Relief.”

“While we also welcome the Chancellor’s decision to answer our repeated calls for a proper review of the system and the way in which it is calculated, the devil will definitely be in the detail. With the review scheduled for after the General Election, we are keen to see all parties commit to making concrete moves to tackle an issue that many businesses feel has needed addressing for some time.”

However, not all in the garden is rosy. The fact that the structural review has been scheduled for 2016 has disappointed many within the SME community. Many businesses would have much preferred the review process to be starting sooner. Simon Edmondson, regional chairman for Manchester and North Cheshire, Federation of Small Businesses (FSB), labelled the existing system ‘out of date’ and called on the government to ensure that it delivered a full root-and-branch review, and not just tinker round the edges:

“The current system is out of date and frankly needs to be put out to grass,” he said.

“It’s complicated, opaque, regressive and unresponsive to changes in economic conditions. Many of our members tell us paying business rates is their third biggest cost after rent and wages, yet the tax is poorly targeted and not based on ability to pay.”

“All businesses will be grateful for this review, but let’s be absolutely clear on what businesses want: fundamental reform of the business rate system. The announced package of renewed reliefs will also be essential, as they will help bridge the gap until fundamental reform can deliver the change everyone agrees must now come.”

If you’d like any further information on business rates or would like more detailed information on the latest Autumn Statement, then contact Steven Glicher accountants on 0161 405 8007 or email info@stevenglicher.co.uk

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