The Government has announced an in-depth review into the system of business rates in the UK, which has been branded “outmoded, clunky and regressive” by the Corporation of British Industry.
CBI director general John Cridland, commented: “The current system of business rates is outmoded, clunky and regressive and it’s holding back the high street. That’s why we’ve been calling for a wholesale review of the system.
“The package of measures already announced in the Autumn Statement that will come into force from April will help ease the pressure on hard-pressed retailers.
“But this review provides an opportunity to go much further and we’ll be making the case for removing the smallest firms from paying business rates completely, linking rates to CPI (Consumer Price Index) rather than RPI (Retail Price Index) and introducing more frequent valuations. This would go a long way to achieving a more competitive business rates regime that incentivises business investment and supports the high street.”
The Government’s review of the business rates system in England is underway now and findings will be presented in time for the Budget in 2016.
The current system, which has been in place since 1988, has come under fire for its policy of charging retailers based on the value of their shop or other commercial property. Thus means that companies with similar turnovers can pay dramatically different sums because their properties have varying “rateable values” depending on the size and location of their premises.
Additionally, current valuations of business rates are based on property prices in 2008, before the economic downturn impacted commercial real estate and retail turnover.
The Government postponed a fresh evaluation of the system last year.
Experts predict the outcome of the review will present a “fiscally neutral” solution, meaning the total sum collected from business will not change, according to the BBC.