Calls To Exempt Very Small Firms From Business Rates

The British Retail Consortium (BRC) put forward proposals to make over 100,000 small businesses exempt from business rates before the government consultation on the reformation of the tax ended last week.

The BRC was joined by a number of other business groups and firms pushing for fundamental reform of the rates system, which will be worth around £27m to the Treasury this year.

One of the proposals is that small businesses be freed from the tax in a move that would affect some 1.14 million properties. According to the trade body, this would reduce the workload for the Government’s valuers and allow them to monitor the value of other properties more regularly, thereby ensuring that business rates move in line with the state of the economy.

According to the BRC, by removing businesses whose properties have a rateable value of less than £12,000, more than 100,000 small businesses would be boosted and, even though such properties account for 64 per cent of the total eligible for business rates, they only contribute 6 per cent of the Treasury’s intake for the tax.

In its submission to the consultation, the BRC said that removing these properties from the financial and administrative burden of business rates would allow annual revaluations for other businesses, thereby making the tax responsive to the actual state of the property market and having economic advantages by reducing the burden of taxation on businesses in economic downturns.

Other proposals from business groups include scrapping the inflation-linked annual increase to business rates and allowing empty properties to avoid paying business rates for six months.

Now that the consultation has closed, Chancellor George Osborne will have to consider whether the BRC’s proposals will, as it claims: “have a hugely positive effect, with the cost to the public purse outweighed by the boost to enterprise and the substantial efficiency savings that the exemption would bring.”