A report from the property industry is set to demand that one million small firms should be exempt from business rates, a move intended to provide much needed support to small firms struggling under the demise of Britain’s ailing high street.
The report will be issued by the British Property Federation (BPF) in the coming weeks, and will propose an overhaul to the way companies are taxed by local councils. Included will be a proposal to replace the current system of five-yearly reviews of each firm’s annual business rates – a change aimed to make the market more dynamic and adaptable to changing economic conditions.
“It is crucial that business rates are allowed to rise and fall in line with economic conditions. More frequent revaluations would make the system fairer and more responsive,” said Liz Pearce, Chief Executive of BPF.
She added: “If rates continue to rise unchecked, this will have big implications for the future and will have a big impact on how our towns and cities will look in 10 or 20 years’ time.”
The BDF estimates that by election time next year the rates will have increased by 25% since 2010.
Mary Portas, the Government’s appointed so-called High Street Tsar, said: “I still don’t think politicians are taking the issue of business rates seriously enough. The problem has become unacceptable and it is way past time the issue was tackled head on.”
The federation has said the overhaul is aimed to help all small property-based firms and not just retailers.
John Allan, national chairman of the Federation of Small Businesses, said the current rates system was becoming rapidly unaffordable for many small firms.
Meanwhile, Paul Turner-Mitchell, an advisor for the BPF proposal, said that the cost to the Treasury of exempting one million small businesses from business rates would be £700m. However, he also said that much of the cost would be recuperated by increased corporate tax and higher employment.