Watch the webinar
- Annie Gascoyne, Director of Economic Policy, CBI
- David Jones, Managing Director, Avison Young
- Faisal Shafiq, Head of Direct Taxes, Marks and Spencer
- Ceri Thomas, Editor and Partner, Tortoise Media (Chair)
- On COVID-19: the Prime Minister has confirmed that the current lockdown will end on 2 December, and that England will re-enter a strengthened tiering system. We’re expecting more details on this tomorrow. We’ve also heard about the proposed easing of restrictions for Christmas. The CBI is continuing to work with the government on the implications of these measures for business, as well as the guidance, and the financial support available for firms
- On the Comprehensive Spending Review: we’re now seeing the largest single fall in GDP that the UK has ever experienced – it’s 9.7% smaller now than at the end of 2019. Unfortunately, we’re also expecting to see another dip from the current period when restrictions have been increased again. In terms of the Comprehensive Spending Review, the CBI is hoping for some progress on critical issues: green energy, infrastructure, and some of the funding gaps the UK has as a result of leaving the EU
- On business rates: from a business tax perspective, business rates are a fixed cost, which is not associated with the profitability of the business. The UK gets significantly more from business rates and property taxes than other G7 countries, which has implications in terms of inward investment. If you reduce business rates, this could incentivise business spending in other ways – leading to increased tax take from other business taxes.
- Business rates are made up of the rateable value of property, and the uniform business rate
- The current system is failing, because in recent years there’s been a big increase in business rates, which is way out of kilter with rental growth. Indeed, the increase in rates has outpaced growth by around 40%
- The government has kept business rates on the RPI inflation measure – which has made it the highest base rate of tax that we have in the UK
- Together with the CBI, Avison Young are calling on the government to reduce the uniform business rate, and increase the regularity of rates re-evaluations
- We also want the government to give back the unnecessary tax taken from business as a result of the postponement of the latest re-evaluation, and then for the uniform business rate to be frozen for an extra two years. Thereafter, the increase in rateable value should dictate government tax receipts rather than the uniform rate.
- The cost of business rates is huge for M&S and for the wider retail sector, because rates aren’t linked to performance. An individual store could be making massive losses but their costs could still be going up
- Obviously, business rates as a tax isn’t going anywhere. So M&S is asking for a redressing of the tax system, in terms of how taxes are spread out across the range of taxes.
- It’ll be difficult to rejuvenate towns without addressing the business rates system. Because of the shift to online spending, the business rates system hasn’t really kept up with the times in terms of where money is being created and then taxed
- Footfall in stores has almost halved in the last 30 years. But in that same period, the business rates bill has almost doubled. Something must be done to reduce that burden if we are to revive town centres.