Business Rates Reform to Support UK Growth

Notably absent from The Chancellor’s growth speech yesterday was an update on business rates.

However, with many of the UK’s largest employers – already hit by national insurance changes in the last Budget – being its biggest ratepayers, lack of movement in this area is likely to be a further brake on private sector investment and growth.

If, in the Chancellor’s own words, bold reform needs it to be “easier for business to succeed and grow”, there has never been a better time to put a plan in place to restructure UK business rates.

Reducing this cost and allowing businesses to better understand future liabilities would align with Government policy. It’s supported at a macro level, but drills down to the specific rules, regulations, and myriad of exemptions and reliefs linked to this tax, and the practicalities are different.

For example, the British Retail Consortium (BRC) lobbied for lower rates for retailers, and arguably, they won the battle but lost the war, with the Government announcing support for the High Street, delivering a permanent reduction in rates for retailers. However, this will be funded by increased poundage of up to 10p/£ (approximately 18%) for all ratepayers with higher value (£500,000+ RV) properties, including retailers.

This initiative, coupled with the uncertainty created by the next rating revaluation coming in just over 12 months, can do little to support businesses in their ability to forecast their liability. Confidence that this cost will not increase and impact their ability to invest and grow would be widely welcomed.

We would ask the Chancellor to use this week’s momentum and respond to the challenges we consistently hear from the UK’s largest ratepayers: rates have become increasingly complex and difficult to forecast, and they are fundamentally too high.

In our view, HM Treasury should:

1. Commit to a mid-term (three-year) timetable to reduce rate collection by a third, reducing the multiplier from its level of .555 to .37 and step back from the plan to introduce higher poundage on properties with RVs of £500k.
2. Deliver a plan that allows business to self-assess their Rateable Values, at the latest, from April 2029, providing greater certainty, improved cashflow and removing the uncertainty and delay created by the current appeal process.

Being courageous at this level would support UK Business providing cost certainty, improved sentiment and more funds for the investment in growth that we need.