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.
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.
A rethink of the business rates system that delivers the certainty business needs to invest and grow
A grace period that enables business to recoup investment costs before their rates rise in-line with the new value of the property
Reform that better aligns business rates to the economic cycle, ensuring rates paid reflect the true economic situation
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.
"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
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%.
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.
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.
CBI response to the structural review of business rates
A vision for a simpler, fairer, more competitive business rates system
The CBI's 2017 Budget submission letter to the Chancellor
CBI sends joint letter to Chancellor on business rates relief for April 2018
CBI scorecard on Autumn Budget 2017
CBI response to the 2018 spring statement
CBI establishes business rates working group
Analysis of business tax contribution in 2017/18
CBI publish analysis on why business rates need a rethink
The CBI's 2018 Budget submission to the Chancellor
2018 Budget brings more treats than tricks
CBI submits evidence to inquiry into the impact of business rates
The CBI's John Allan argues business rates reform can't come soon enough
CBI Business Rates Conference emphasises the urgent need for reform
Understanding the government's position on business rates reform
What we learnt from the Business Rates Conference
Dealing with the impact of business rates in the UK and globally
The CBI submits a joint letter on business rates
Treasury Select Committee publishes business rates report
All three political parties set out their stall on business rates
Chancellor announces a fundamental review of business rates as part of his first Budget
Chancellor announces 12 month business rates holiday for retail, hospitality and leisure sectors in England
Treasury publish business rates call for evidence
CBI submits response to Treasury call for evidence on business rates
Over-rated: making the case for business rates reform
CBI responds further to Treasury call for evidence on business rates revaluations
Chancellor announces business rates changes in 2020 Spending Review
The CBI launches its Invest for Growth campaign to increase UK R&D spend to 3%, with its Now is the Time to Innovate – Road to 3% report
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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
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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.