Business rates represent a significant cost for businesses, playing a role in key decisions such as investment that are vital for the growth and prosperity of the UK economy. Urgent reform of the business rates system is a key priority for CBI members, who feel it is broken and needs addressing to ensure it is fair and sustainable to support growth and prosperity in the UK. Businesses need certainty and predictability to be able to make decisions that shape their future growth.
There are a number of reasons why the business rates system is no longer working. The CBI’s submission sets out the following key challenges that need addressing:
- The burden of business rates is high and increasing
- The UK relies more heavily on property taxation than the rest of the G7
- The burden of business rates is disproportionate across sectors
- Business rates do not flex with the economic situation
- Business rates impact investment decisions
- The recent revaluation disproportionately affects regions across the UK
- Fiscal neutrality constrains policy makers
- Previous policy changes have not gone far enough
- The check challenge appeal system is not working.
To help address these challenges, the CBI and its members are calling on the government to urgently reform the business rates system to put business rates back on a sustainable path to supporting investment, economic growth and prosperity across the whole of the UK. A crucial step in achieving this is to conduct an independent review of the business rates system ahead of the next revaluation, with the objective of reducing the rates burden on individual businesses over time. However, the CBI recognises that conducting a thorough review of the business rates system will take time. As this review takes place, the challenge of the current business rates system will continue to impact business decision making, stifling investment and growth.
To support businesses now, we are calling on government to adopt the following recommendations at Autumn Budget 2019:
- Introduce a similar measure to Scotland’s Business Growth Accelerator that enables new properties or improvements to existing properties to receive a 12-month holiday from business rates payments.
- Introduce a strict set of guidelines setting out in what circumstances local authorities should grant partly-occupied relief.
- This should be revenue neutral to local authorities such that any relief granted should be reimbursed by central government.
- Transitional arrangements should be removed for properties whose rateable value decreased because of the 2017 revaluation.
- The rates bill of these properties should reflect the 2017 rateable value, while upwards transitional relief should be maintained.
- The check challenge appeal system should include a workable VOA portal and business rates valuations should be transparent, with the evidence upon which values are based being made available to rate payers.
The CBI will continue to lobby on behalf of members to secure a fair business rates system that works for everyone.