Now that the dust has settled on Labour’s decisive election victory, a new approach to business rates should be on the horizon.
However, despite a lengthy list of some 40 planned reforms in the King’s Speech last week, business rates was not amongst them.
Notwithstanding this, we expect several key changes for the business rates system under the new Government which has promised to ‘overhaul’ it with an entirely new approach.
Labour wants to replace the current business system to create a more equitable framework that balances the burden between high street retailers and online giants.
This reform is intended to incentivise investment, reduce empty properties and support entrepreneurship, with particular focus on benefiting the small businesses that have long struggled under the existing system.
Interestingly, this the same reasoning – almost verbatim – behind the introduction of The Rating (Empty Properties) Act 2007 introduced under Gordon Brown’s Labour Government. However, the specifics of these changes or when they might occur remains unclear.
History has shown us time and again that reforming the business rates system, which can be traced back to the 16th Century, is no easy feat!
Previous Governments have tried and failed, applying sticking plasters and quick fixes to attempt to address the many pitfalls of the business rates system.
But all that is about to change, with a complete overhaul of the system long overdue. Given that this property tax contributes so many billions to the Exchequer annually, any changes will require careful consideration.
However, with no mention of business rates within the King’s Speech, we will have to wait until the Autumn Statement for more clarity on what this top-down reform of the business rates system will entail. Indeed, we could see the launch of a consultation on the matter around that time.
How the Government plans to raise the same revenue generated under business rates in a fairer way to “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship” remains to be seen.
Until then, our guide on business rates remains a useful resource, explaining what business rates are and how they are calculated, as well as explaining some of the ways in which you can save money on business rates.
