Philip Hammond has told business owners operating in Britain’s most rural areas to prepare for an increase in business rate relief to 100 per cent in April 2017.
The chancellor announced in today’s Autumn Statement that the doubling of rural business rate relief – completely removing the burden of business rates – would bring a well-needed tax break to small businesses that are the “lifeblood of their communities”.
Rural rate relief is the scheme offered to rural businesses in place of regular small business rate relief. Before today’s announcement, only 50 per cent of rate relief was mandatory for small companies, while the remaining 50 per cent was allocated at the discretion of local authorities.
The move has been praised as “excellent news” by a spokesperson from insurer NFU Mutual. “The decision reflects the chancellor’s commitment to investing in productivity across the UK including its regions, freeing up cash for beneficiary businesses to invest in their own growth,” a spokesperson said.
The chancellor announced the full business rate relief for the following rural businesses serving populations of under 3,000:
- The only village shop or post office with a rateable value of up to £8,500
- The only public house or petrol station with a rateable value of up to £12,500
Increasing rural business rate relief to 100 per cent is expected to save qualifying businesses up to £2,900 every year in business rate payments
The Federation of Small Businesses was quick to welcome the added support for small business growth in Britain’s rural regions.
— FSB (@fsb_policy) November 23, 2016
Graham Marley, chief executive at the Let’s Do Business Group, said that while the increase in rural rate relief is good news for rural communities, it is not clear yet whether this will be extended to all types of businesses or just villages with only one shop such as a convenience store or a pub.
Phil Vernon, business rates leader at PwC, added to this by saying: “There are still concerns for many businesses facing rate increases next year and while the government has opted to lessen some of the impact of the April 2017 revaluation with a transitional scheme, they are still pressing ahead with a far less generous scheme in 2017 than the one adopted in 2010, when increases were capped around 12.5 per cent.
“The business rates burden will increase for some businesses by up to 42 per cent next year, which could see their payments increase by up to 75 per cent from April 2018.”
According to Vernon, there are also some “unwelcome features” of the transitional relief scheme that are still not addressed, as well as some regional variations where the scheme is not being adopted. “Many of the business rates supplements do not receive transitional protection and so larger businesses could actually be facing increases of 48 per cent,” he explained.
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