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Business Rates - but not as we know it.

Tuesday, October 20, 2015 By Phil Graves

So Chancellor George Osbourne has gone where no man has gone before – he wants to abolish the existing Uniform Business Rates system and allow Local Authorities to collect their own taxes, retain them and allocate the income as they seem fit. The trouble is, it does raise certain issues.

For Brighton and Hove city, you would think the announcement is a positive one as it is a fairly affluent place to live and work and with the economy seemingly doing well, the income levels will be far higher then the existing grants provided by central Government. So far, so good.

However, there is no guarantee that the collection of such monies from local business will actually go back into the business arena. There are plenty of alternative demands for the cash, including social services which is very needy. In addition, will the need for a greater income from Business Rates have an affect on planning decisions and encourage local authorities to give permission for more commercial property to be built? If so, this maybe inappropriate.

The new proposals do not come into play for some time and will be constantly reviewed by the Government. The current system is based on 2008 property rents and although the planned revision for 2014 was suspended, many retailers in particular, feel the levels are too high and were geared prior to the economic crash.

The Chancellor specifically referred to the changes as a chance to support the ‘devolution of power’ and help the High Street traders, particularly against online businesses. Perhaps one solution would be to legislate that all online enterprises must have a High Street presence in addition to online retailing and encourage the occupation of empty shop units. With vacant rates in some areas up to 20% or more, they need the help.

Either way, the SME’s must have support and the current Small Business Rate Relief should be extended and also include a greater number of commercial occupiers by way of lifting the threshold.

Many questions and not so many answers at the moment, but the Government initiative is broadly a good one, with much more detail required.