A number of business lobby groups, including the Federation of Small Businesses (FSB), British Retail Consortium (BRC) and the British Chambers of Commerce (BCC), have written to Chancellor George Osborne asking him to change the business rates system ‘as a matter of urgency’ in a bid to rescue the burden on small businesses.
The letter advises the Chancellor to switch from using the retail prices index (RPI) as a benchmark for business rates to the more commonly used consumer prices index (CPI) and states that the ratings system should encourage investments in machinery while also reducing the number of appeals by making the process simpler for small concerns.
Saying that the overall burden is ‘too high and at tipping point’, the letter goes on to point out that the UK has the highest non-domestic property taxes in Europe, which acts as a brake on investment for all businesses looking to invest in the UK.
Currently, business rates are charged on businesses that occupy non-domestic or commercial properties. The property occupier, either the owner or the leaseholder, pays the business rates.
These are paid to local authorities, which help finance local services and it is estimated that £23.5m will be raised this year from the tax. In his Budget last year, Mr Osborne pledged to double small business rate relief from £6,000 to £12,000 from April 2017, a move that would enable 600,000 businesses to pay no rates.
The group wrote after the Chancellor had already hinted he would slash corporation tax to below 15 per cent in a bid to make Britain more competitive after the Brexit vote.
However, while the signatories applauded any action to stabilise economic uncertainty, they said that to make the country a ‘super-competitive economy’, business tax reforms must go beyond cutting corporation tax.