Ministers unveil new £26bn tax with lower for prime road funded by rise for on-line giants
The government has revealed more about its plans to permanently cut business rates for thousands of high street firms.
Draft legislation has been published to reduce rates for retail, hospitality and leisure properties from 2026. The change would benefit properties with a rateable value under £500,000 . To fund it, rates would rise for properties with a rateable value over that amount, which the would include most large distribution warehouses, and those used by online giants such as Amazon. The Treasury claims the higher tax rate will only apply to the top 1% most valuable properties.
Business rates are forecast to raise £26 billion in 2024/25 and make up a quarter of Local Authority core spending power. They support critical local services, including child and adult social care
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However, property experts Altus Group claimed it would still mean that nearly three times the amount of retail, leisure and hospitality premises will pay the levy in 2026 compared to large distribution warehouses.
It is also unclear whether the higher rate will apply to public sector buildings, including hospitals, prison and even the Treasury’s Whitehall base. However, it is possible they will be compensated in a similar way public sector employers have under the shake-up of national insurance announced in the Budget.
James Murray, Exchequer Secretary to the Treasury, said: “For too long the business rates system has been working against our high streets. Today is a major step towards our new system that will support retail, hospitality and leisure businesses on our high streets to succeed. This Bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.”
Craig Beaumont, executive director at the Federation of Small Businesses, said: “For far too long, permanent business rates reform has been put into the too difficult box.
“It is extremely encouraging on rates to see ministers standing up for small firms in retail and hospitality and taking long-term action necessary to the future of our high streets – we look forward to continuing to work in partnership with the new Government to make sure no small businesses whatsoever are blocked from achieving their ambitions by a rates system that has not simply not kept pace with the needs of a modern economy.”
