George Osborne has announced that some 600,000 small businesses will be taken out of business rates from next year.
This could save small companies £6,000 a year, the Chancellor says.
Some 250,000 firms will pay less in business rates, Osborne says, and half of all properties will pay no or less business rates under his plans.
Sage data shows that more than a third of the UK’s small businesses say that reforming business rates would have the biggest impact in transforming their company.
Business rates based on property rental value rather than a commercial venture’s turnover were written in the Poor Law of 1601. Many entrepreneurs feel that they are not fit for the digital age, which has taxed retailers with physical presences more heavily than online retailers.
In the Budget, the Chancellor also announced that future business rates increases will be based on CPI rather than RPI, leading to more accurate rates bills for retailers.
The Assocation of Convenience Stores (ACS) has welcomed the change. ACS chief executive James Lowman says, ‘The increased small business rate relief threshold will be a welcome measure for thousands of local shops who are facing rising costs in other areas of their business. This measure will also significantly reduce the burden on the VOA, as more stores are taken out of paying rates altogether.
‘We welcome the move from RPI to CPI for annual business rate increases but urge the Chancellor to cap rates increases in line with the government’s 2 per cent inflation target.’
ACS will be looking in details at the Chancellors plans to reform the business rates system, ensuring that it does not disadvantage local shops.
Samantha Day, tax partner at KPMG Enterprise says that, additionally, a reduction in the capital gains tax rates to 20 per cent and 10 per cent will undoubtedly incentivise more people to start, scale up and then sell their own business, while the extension of Entrepreneurs Relief to long-term investors in unlisted companies will also be welcomed.
‘Couple this with the further reduction in corporation tax, and a reduction in commercial stamp duty and it is plain to see that the backbone of our economy – our legion of growing entrepreneurial businesses – are the winners this Easter,’ she adds.