UK Communities Secretary Sajid Javid has proposed a draft law to reverse the so-called ‘staircase tax’ that raised the local rates paid by small businesses on their premises.

Mr Javid has published a consultation that would reverse the court ruling in 2015 that altered the local business rates payable by firms operating out of two or more rooms in the same building linked by communal corridors, staircases or lifts. The ruling meant that where those businesses had paid a single bill, they now faced two or more charges.

The Supreme Court case saw hundreds of businesses that operate in adjoining units or rooms which are accessed by communal facilities receiving separate rate bills for each unit instead of for the business as a whole.

However, under the proposal being consulted on, the Government would give small businesses the chance of having their rate bills recalculated, entitling them to
backdated refunds.

Small business owners and lobby groups have welcomed the consultation, with a spokesman for the Federation of Small Businesses (FSB) saying that the staircase tax arbitrarily penalised small firms simply because they shared a communal staircase, corridor, or even car park with another business.

He added that it is very good news that the Government has stepped in to repeal “this ludicrous tax” and said he hoped that politicians of all parties would back its abolition when it is put to Parliament.

The FSB said it would take an active part in the consultation to ensure that the legislation is right and that all the small businesses affected are reprieved without delay.

The consultation runs until 23 February.

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