Proposals to cut business rates would have virtually no impact
Proposals to cut business rates if a Conservative government is re-elected would only see business’s bill cut by a tiny fraction.
The Conservative manifesto outlines plans to reduce the rates burden by £320m in the 2020-21 financial year, by extending a retail discount from 33% to 50% for businesses with a rateable value below £51,000.
However, property company Altus Group has pointed out that for the three following years, it said it will only reduce total tax receipts by £10m each year.
This compares to a business rates yield of more than £33bn for each year from 2021-22, meaning the rates cut will only reduce the burden by 0.03, according to Altus.
‘The commitment to lower the burden as part of a wider review is an acknowledgement that the standard rate of tax, at its highest level since 1990, at over 50%, is a major issue for business across all sectors of the economy, says Robert Hayton, Altus head of business rates.
‘However, the promised cut of around 0.03 per cent from April 2021 whilst a start, will need to go much further and deeper to have a meaningful impact.’
He adds that the manifesto does not clarify how the £10m reduction will be implemented or spread across rateable businesses.
The Government has long promised to tackle the size of business rates, but produced little in the way of concrete proposals. The Labour party has said it would look at a levy on property landlords and develop a retail sector industrial strategy. The Liberal Democrats have proposed scrapping business rates and replacing them with a tax on landlords.