The Treasury Committee is today launching a new inquiry into Business Rates to scrutinise how Government policy has impacted business.
The Committee will examine how Business Rates policy has changed, including Business Rates retention, alternatives to property-based taxes, such as the proposed digital services tax, and how changes to Business Rates could impact businesses.
Commenting on the launch of the inquiry, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said, “Many high street businesses are struggling to remain competitive. It has been estimated that 10,000 shops will close this year. Unless action is taken, closures could continue and job losses may soar.
“Business Rates can represent a substantial financial burden on the high street. The Treasury Committee is therefore launching an inquiry today into the effectiveness and impact of these rates on business. We’ll examine how the current system is working and consider whether an alternative system, for example a land-value based tax, may help level the playing field between retailers.
“At the end of the inquiry, we’ll make a series of recommendations to Government on the fairness and effectiveness of the current system, and how it could be improved.”
The standard multiplier, which applies to all larger premises in England (across all sectors) who’s Rateable Value is £51,000 and above, will rise to 50.4p in England from 1st April increasing inline with inflation. It will be the first time the tax rate for business rates will have gone above 50%. When the national business rates system was introduced in 1990, the multiplier was set at 34.8p.
Real estate adviser Altus Group says business rates bills in April, for 2019/20, for nearly 50,000 retail premises which have a Rateable Value above £51,000 and are precluded from the new retail relief, which will discount bills by a third, will be forced to pay an extra £127.88 million in inflationary rate rises pegged to September’s CPI rate despite the crisis engulfing the high street.
Robert Hayton, Head of U.K. business rates at Altus Group, “warmly welcomed” the Committee’s inquiry saying “The Budget measures last year, whilst great for independent retailers with smaller premises, did nothing to help those major retail and hospitality businesses who are reducing their estates and headcount often citing high rates as a contributory factor.
“The long term unfairness for those large premises where property values have fallen sharply but are then denied the commensurate tax reduction must be addressed by this inquiry and, hopefully, this inquiry can take the bull by the horns and see how to best level the tax to turnover ratio with large online only retailers but a land value tax isn’t the answer and is likely to make the system less not more fair.”