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Quick Guide: The Business Rates Debate

Wednesday, February 22, 2017

 

Even as this is written, the chances of meetings being held in Whitehall this afternoon on government concessions are likely.

This was certainly indicated at Prime Minister’s Question today when Caroline Lucas MP claimed raises would ‘devastate’ her constituency of Brighton Pavilion. 

It also may be announced when Communities Secretary Sajid Javid answers questions in the House of Commons.

So what are business rates?

Business rates are a tax relating to non-residential property. This includes restaurants, shops, factories and offices.

Why is there a problem?

The amount that each property owner in England needs to pay has been revaluated for the first time since 2010.

The rate charged is based on the amount that could be achieved in an annual rent. This is known as the rateable value.

It is then calculated with the ‘multipler’, a figure set by the government each year, to arrive at the final bill. 

The government says most businesses’ rates will be reduced or stay the same stating it is the biggest ever cut in business rates. 

However, success interviews with business owners say their rates will be doubled or even tripled. This is partly caused by rental prices and the economy in 2010 being very different.

How has the government responded to the backlash?

The Prime Minister said it was right for rates to reflect the changing property prices and she believed it was a system underpinned by fairness. However, this may be one the government needs to gran hold of before it escalates further.

However, the PM is now suggesting in an effort to support businesses there will be ‘transitional’ relief for those who will see large increases. 

Mrs. May said: "I recognise that there has been particular concern that there will be some small businesses that are particularly adversely affected by the result of this revaluation. That's why I've asked the chancellor and the communities secretary to make sure there is appropriate relief in those hardest cases."

When will it come into effect?

The changes are to come into effect on 1st April 2017.

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