Chancellor Philip Hammond used the Spring Budget to reveal three business rate reforms intended to soften the blow of rate increases and appease those hit hardest, with £435m in government funding set aside to finance the package.
Hammond announced a hardship fund for local authorities to support struggling small businesses, caps to rate increases for firms losing existing relief and a special discount for Britain’s pub landlords.
£300m discretionary support fund
Hammond acknowledged that re-evaluation of rates had created “hard cases”, and responded with a “discretionary support fund” to support the most vulnerable business owners.
Through a £300m “discretionary relief” fund local authorities will be able to give direct financial support to local businesses facing the biggest increases in rates.
London’s independent retailers are braced for a doubling of existing rates under re-evaluation, and James Lowman, CEO of the Association of Convenience Stores, welcomed new business rate reforms.
“The £300m discretionary fund given to local authorities could provide welcome relief to the hardest hit by business rates increases,” he said.
£50 cap for businesses taken out of rate relief
Small business owners losing their current rate relief after the re-evaluation will be supported by a cap to business rate increases. No business taken out of the relief scheme will be charged more than £50 per month.
Under the reformed system, subsequent rate increases will be capped at £50 per month or the new transitional relief cap, whichever is highest.
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£1,000 discount for pubs
Local pubs with a rateable value of under £100,000 have been handed a discount of £1,000 ahead of the imminent re-evaluation.
This scheme means that nine in every ten UK landlords will be supported in absorbing their updated business rates bill for 2017/18.
Speaking to Business Advice on the new discount, CEO of pub chain St Peter’s Brewery, Steve Mangall, welcomed the recognition of “the plight of pubs and the struggles they face”.
“Pubs are still closing at an alarming rate, hopefully this will ease some of the pressure,” Mangall added.
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Of the business rate reforms, Hammond said in his Spring Budget speech: “Taken together, this is a further £435m cut in business rates, targeted at those small businesses facing the biggest increases, protecting our pubs, and giving local authorities the resource to respond flexibly to local circumstances.”
Adding further comment on business rate reforms, Phil Foster, managing director of Love Energy Savings, warned that seemingly “generous” measures should be considered in the context of upcoming hardship for business owners.
“We must remember that they come in the wake of the backlash that faced the last revaluation. Small business owners will benefit from the £1,000 reduction, the £50 a month cap for those leaving rate relief, and a £300m relief fund respectively, but the self-employed and members of the digital economy are set to experience some turbulence,” Foster said.
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