Business rates could be slashed for thousands of small businesses in next month’s Budget in a bid to revive flagging High Streets.
The Chancellor, John Healey, is said to be considering possible changes to business rates relief which could exempt some businesses from the tax altogether.
It is one of a number of possible new measures to cut taxes and boost incentives for high street businesses which he will announce in his first budget on October 28, with the cost of doing business in Britain expected to be one of his key themes.
In a bid to progress PM Andy Burnham’s pledge to make High Streets, which are ‘markers of decline ’, into a ‘symbol of Britain’s renaissance’, Mr Healey has apparently held workshops with business groups to hear first-hand how he can breathe life into the UK’s struggling shops.
With Mr Burnham calling on Labour to ‘listen to small businesses more’ to boost economic growth, it was reported today that Mr Healey has held a series of such workshops over the last fortnight.
One possible option he has is to increase the threshold for small business rates relief (SBRR) in order to exempt firms in premises with a so-called rateable value of less than £12,000. This SBBR £12k rate was frozen while a nationwide revaluation took place.
But if the Chancellor increases it in line with inflation, it would rise sharply to £17,096, meaning thousands of companies could benefit from paying no business rates at all.
Meanwhile, tapered relief could be introduced for businesses in properties with a rateable value of up to £20k.
John Healey (pictured on September 14) is said to be considering possible changes to business rates relief which could exempt some businesses from the tax altogether
Business rates soared for many in April after business rate revaluations – in some cases by as much as a staggering 80 per cent, with the increased amounts due to be phased in.
However, many warned that the rises would put an unsustainable burden on thousands of small businesses up and down the country.
One measure that could help to sugar the pill is to increase the Treasury’s transitional relief, which is designed to ease the impact of the escalating bills, and introduce a longer transition period.
Currently, smaller firms have their bills capped at no more than 5 per cent this year, 10 per cent next year and 25 per cent in 2028-29, plus inflation.
The PM has previously promised to offer business rate support to pubs, clubs and live music venues, with a 20 per cent cut which he says will save the average firm £1,100 a year from April, as part of a raft of measures to boost the High Street.
The British Beer and Pub Association estimates that raising the SBRR threshold from £12,000 to £18,000 would pull 5,000 pubs out of paying business rates. It would also reduce the tax bill for many coffee shops and smaller retailers.
With over four pubs closing a day, according to data from the Campaign for Real Ale, its chief executive told today’s Telegraph: ‘We’ve long called for an increase in thresholds as this would help the local stay open, keep people in work, and remain the backbone of the community, and we’d strongly welcome this measure alongside a consideration of greater transitional relief.’
David Hale, government affairs director at the Federation for Small Businesses, which is one group which has lobbied the Treasury for more relief, said it would make the case for a ‘proper, sizeable increase to small business rates relief’.
The federation and other industry groups have argued that high taxes and rents are destroying high streets.
He said that ‘taking large numbers of small firms out of this dated tax altogether’ was ‘an essential element of a pro-small business budget and would help ‘to make a reality of the promise of breathing space to come’.
Kate Nicholls, chairman of UKHospitality, said they were ‘working with the government to make sure that restaurants, cafes and hotels receive comparable support on business rate changes at the Budget’.
Mr Healey could also announce more support for entrepreneurs and pledge to go further on plans to ‘buy British’ in public procurement, including in the defence sector.
However, it is in defence spending where he faces a major headache trying to plug the £5bn defence budget deficit left by former PM Sir Keir Starmer.
A Treasury spokesman said: ‘As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.’
It comes as Labour actively discusses plans to extend the so-called ‘mansion tax’ to properties worth more than £1.5million ahead of next month’s budget.
Up to 300,000 homes could be hit by the tax on property values, particularly in London and the south-east, in a move first exclusively predicted in The Mail on Sunday.
The paper revealed on July 5 this year that new PM Andy Burnham could drag thousands of middle-class homeowners into the punitive tax by lowering its current ceiling of £2million to £1.5million.
This would mean householders in the new bracket and over having to pay out eye-watering four-figure sums in tax.
Ironically, the PM has previously dismissed the unpopular tax as too ‘symbolic’ and said it leaned into ‘the politics of envy’ when it was championed by failed former Labour leader Ed Miliband in 2015.
Now government sources have confirmed that the Chancellor John Healey is indeed looking at plans to widen the mansion tax – or high value council tax surcharge as it is officially known – in the run-up to his first budget on October 28.
