The Government has at last committed to reform of business rates.
That’s the good news.
But it has only promised to create a fairer system over the length of this parliament and in the short term, even for those businesses acknowledged to be particularly vulnerable as costs rise, their rates are scheduled to rise.
These are retail, hospitality, and leisure properties valued under £500,000 who will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system. This support is alongside the Budget announcement to freeze the small business multiplier. But it is not set to come in until 2026.
To finance these cuts, rates for properties exceeding this value, including large distribution warehouses and online retailers like Amazon, will increase.
The government is also legislating to increase the Employment Allowance – a discount in National Insurance bills – from £5,000 to £10,500 from April 2025.
In the meantime, Begbies Traynor has warned other rising costs are likely to drive an increase in insolvencies.
Also in 2023, the UK experienced its slowest rate of new business creation since 2010, with only 316,000 start-ups compared to 337,000 in 2022, according to the Office for National Statistics (ONS). This decline reduced the ‘business birth rate’ to 11.0%.
The FSB (Federation of Small Businesses) has welcomed the legislation for the significant increase to the Employment Allowance which FSB strongly championed, to protect smaller businesses with employment costs.
It has also welcomed the news on proposals to reform business rates, something it has long been calling for.
The CBI (Confederation of British Industry) has also welcomed the proposals but wants the government to prioritise business rates reform to “end the unpredictable cycle of rate increases and reduces the overall burden of the system” ahead of the next revaluation in 2026.
Do you think the projected waits are too long? Can you hang on for them?
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