A review of the business rates system in England has been launched following its announcement in last December’s Autumn Statement. The review promises to “pave the way for changes” according to the Treasury.
The current system has been in place since 1988 and has come in for widespread criticism and is being held partly responsible for the decline of the high street. In the system at present retailers are charged based on the value of their shop or other commercial property. This can lead to inequality with companies on a similar turn over paying radically different business rates.
The Treasury announced it would look to other countries to find out how the system could be modernised. The rates currently paid by English businesses are the highest in Europe and are usually the businesses biggest expense after rent and wages.
Rates are charged based on the rental value of the property the company uses and current valuations are based at 2008 levels, prior to the downturn hitting the value of commercial property. A scheduled revaluation of property rates was postponed by the government last year.
The current system
John Cridland, director-general of the CBI told the BBC recently that he felt that the current system was “outmoded, clunky and regressive” and “holding back the high street”.
John Longworth, director general of the British Chambers of Commerce was pleased about the review but warned that “unless a root and branch reform of business rates is delivered at Budget 2016, firms will regard this as a missed opportunity to tackle a huge brake on investment and growth.”
Here at Bibby Financial Services we welcome any move to reduce cashflow pressure on business owners. If your company is struggling due to cashflow issues, please contact Bibby Financial Services and speak to a member of our expert team, to find out if we can help.
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