Progressive business rates that work for everyone

Progressive business rates that work for everyone

The business rates system needs a rethink, not a sticking plaster

The UK’s legacy business rates system does not reflect digitisation, advancements in technology or changing business models, and a patchwork of reliefs is not going to solve that. COVID-19 has also created new challenges for the business rates system, so the government must use their recently announced review to fundamentally reform business rates.

The change we're calling for

Fixing a broken system will help encourage business to invest and grow, whilst supporting sustainable public finances, which will be crucial as the economy recovers from the pandemic. That’s why we’re calling for government to take active steps towards reducing the overall burden of business rates for individual firms.

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    A rethink of the business rates system that delivers the certainty business needs to invest and grow

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    A grace period that enables business to recoup investment costs before their rates rise in-line with the new value of the property

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    Reform that better aligns business rates to the economic cycle, ensuring rates paid reflect the true economic situation

Why it's needed

If you are a UK business, then it’s unlikely that the business rates system is working in your favour:

• It represents a growing financial burden for businesses large and small, as part of an increasingly complex network of taxation
• It makes it tough for organisations to plan effectively due to sharp changes in cost every 3-5 years when properties are revalued
• It stifles investment in the facilities and innovations needed for sustainable growth, whether solar panels, fibreoptic cable, machinery, factories or production lines
• It exacerbates regional inequality, because many businesses in deprived areas get a double hit following a revelation when economic activity falls, but their business rates bill does not fall immediately to reflect this.

Put simply, a legacy tax cannot support a modern, growing economy, which is why we’re calling on the government to use its fundamental review of the business rates system to take active steps to reducing the overall burden on business to promote growth and investment.

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"Reforming the business rates system is vital for our local economies and for growth that is spread fairly across the UK. The right system would allow business to invest in the factories and offices where we work, and the shops, restaurants, hotels and local amenities that support the communities we live in. This is a crucial part of the puzzle as the economy recovers from the impact of the pandemic."

Annie Gascoyne, Director of Economic Policy, CBI

The case for new rates

Essential funding of our public services

Business rates form an important part of funding for public services which we all use and enjoy. But they can and must be structured in a way that enables businesses to invest for growth, to plan for the future and to turn a profit.

  • 14 pence in every pound of tax paid by business is in business rates – that’s the third biggest tax paid by business

  • The burden of property tax in the UK is higher than any other G7 country (3% of GDP compared to an average of 2%), making the UK less attractive for international investment.

  • Revaluations can lead to sharp changes in business rates that make it hard to plan for the future – most recently the London Borough of Hackney saw average rateable values rise to 46%.

Not all businesses are treated equal

One of the major criticisms of the current business rates system is how disproportionately it affects businesses of different size, across sectors and regions. Find out more about the major recommendations put forward by the CBI to tackle the problem, and learn about the challenges faced by organisations across the UK.

Our progress and impact

The CBI campaigns tirelessly on behalf of our members so that business creates prosperity for all. Learn more about the work we do and the impact we are making on this issue.

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Support the change

  1. Are you a business leader?

    Join the CBI

    Our members are our mandate, and the reason we’re the most influential business organisation in the UK. Join the voice of business and help us campaign to keep progressive business rates a priority on the government agenda.

    Find out more
  2. Are you a CBI member?

    Have your say

    Shape the CBI's work on taxation policy and get insight on the latest developments from government by joining a CBI Working Group.

    Get involved
  3. Are you a policymaker?

    Make a difference

    This campaign is led by the CBI's Tax and Regulation team.

    Contact Annie Gascoyne, Director of Economic Policy, to find out why UK business urgently needs a progressive business rates system and how you can support it.

    Contact us