Chancellor, George Osborne has committed to a full review of the business rates regime after the 2015 General Election.
In yesterday’s Autumn Statement, Osborne agreed to an extension of double relief for small firms and a continuing cap on inflation-linked increases.
The Chancellor said doubling Small Business Rate Relief for a further year will benefit 500,000 firms, while 300,000 businesses will pay no rates whatsoever.
Inflation-linked increases will be capped at two per cent, while high-street shops, public houses and cafes will see a £1,000 discount on rates increased to £1,500 next year.
Phil Orford, chief executive, Forum of Private Business (FPB), said: “Business rates have been an ongoing concern for a large number of our members, with 55 per cent in a recent poll seeing this significant barrier to business growth.
“It is good to see that the Chancellor has agreed with our suggestions of short-term measures to reduce the pain of excessive property taxation with a continued cap of two per cent, a £1,500 discount for retail properties and an extension to Small Business Rates Relief.
“While we also welcome the Chancellor’s decision to answer our repeated calls for a proper review of the system and the way in which it is calculated, the devil will definitely be in the detail.
“With the review scheduled for after the General Election, we are keen to see all parties commit to making concrete moves to tackle an issue that many businesses feel has needed addressing for some time.”
However, the fact that the structural review has been scheduled for 2016 has disappointed many within the SME community.
Simon Edmondson, regional chairman for Manchester and North Cheshire, Federation of Small Businesses (FSB), labelled the existing system “out of date”.
“The current system is out of date and frankly needs to be put out to grass,” said Edmondson.
“It’s complicated, opaque, regressive and unresponsive to changes in economic conditions.
“Many of our members tell us paying business rates is their third biggest cost after rent and wages, yet the tax is poorly targeted and not based on ability to pay.
“All businesses will be grateful for this review, but let’s be absolutely clear on what businesses want: fundamental reform of the business rate system.
“The announced package of renewed reliefs will also be essential, as they will help bridge the gap until fundamental reform can deliver the change everyone agrees must now come.”
Autumn Statement summary
For a full summary of Mr Osborne’s Autumn Statement 2014, pinpointing the key issues interesting the self-employed, click here.