Chancellor of the Exchequer George Osborne has placed a cap on business rates at 2% in today’s (5 December) Autumn Statement.
As expected, business rate rises will be limited to 2% in England and Wales in 2014, instead of being linked to inflation. Rates had previously been expected to rise to 3.2% next year.
Osborne said: “All businesses are expecting rates to rise by 3.2% next year.
“Instead, I will cap the inflation increase in business rates for all premises at 2% from next April.”
However, the Chancellor has stopped short of launching a review of the system or freezing rates entirely, as desired by industry figures such as Business Secretary Vince Cable and the British Retail Consortium.
Osborne also announced companies will be allowed to pay business rates in 12 monthly instalments.
SMEs will also receive a measure of relief from business rates, as the Chancellor announced a 12 month extension to Small Business Rate Relief.
Osborne said: “We will also allow businesses to pay their rates in 12 monthly instalments and clear almost all of the backlog of valuation appeals by July 2015, with reform of business rates on the agenda for the 2017 revaluation.”
The Chancellor also emphasised support for small retailers, acknowledging that local shops had been among the worst affected by the recession.
Osborne said: “There is one group of businesses that have found the recession especially hard – as it has coincided with a rising challenge from the internet that is only getting stronger.
“These are our local retailers – the shops, the pubs and the cafes that make up our high streets across Britain.
“With Small Business Saturday this weekend, I want the government to do all it can to help them.
We’re already changing the planning rules to help town centres compete.
“To get the vacant shops that blight too many town centres to open again, I am introducing a new reoccupation relief that will halve the rates for new occupants.
“So I can announce today that for the next two years every retail premise in England with a rateable value of up to £50,000 will get a discount on their business rates. This discount will be worth £1000 off their bills.”
David Bywater, tax partner at KPMG’s national market practice, said: “The small business sector was definitely a winner in the Autumn Statement with the announcement of a number of very positive measures.
“Overall, the SME community will also be happy with the commitment from the Chancellor to investment in major infrastructure projects and up skilling our young people which will in the long term create an environment for all UK businesses to compete effectively on the world stage.”?
Helen Dickinson, director general at the British Retail Consortium, also believes the measures will benefit SMEs.
She explained: “The Chancellor has recognised that businesses are suffering and is right to listen to retailers’ concerns on business rates. The BRC has campaigned for a two per cent cap, and reform of the business rates system, and it is extremely welcome to hear it announced.
“With the additional measures also announced today on National Insurance, retailers will be encouraged to do even more to support the aspirations of young people across the country. 40 per cent of all jobs for those under 20 are in retail, and this will help retailers provide secure career opportunities for young people.”